Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Interpump Group fourth quarter 2022 results 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 Ms. Elisabetta Cugnasca, Group Head of Investor Relations of Interpump Group. Please go ahead, madam.
Thank you. I am Elisabetta Cugnasca, Head of Investor Relations of Interpump Group. Good afternoon or good morning according to your time zone, and welcome to Interpump fourth quarter 2022 financial results conference call. As usual, it's my duty to draw your attention to the disclaimer slide inserted in the annex part of the presentation I hope you were able to download from our website. Afterwards, it's my pleasure to leave the stage to Mr. Marasi, Board Member and Executive Director of the group.
Thanks, Ms. Cugnasca. Thanks to all of you for the attendance. Before entering into details of the fourth quarter 2022 results, please allow me to make two step back. The first one to the fourteenth of February, 2022, the second one to the twelfth of February, 2020, to remind you to what we commit ourself. In particular, 1 year ago, we committed ourselves to exceed EUR 2 billion of sales through a double-digit organic growth and acquisition. In this regard, let me remind you that our initial expectation was to have a nice single digit organic growth. Afterwards, in the springtime, we upgraded it to a double-digit growth. We committed to confirm and protect the profitability ex-excellence of the Group and to consolidate and align Group sustainability activities and processes.
Three years ago, instead, we committed ourselves to achieve a 33% total sales growth to confirm 22% EBITDA margin including M&A temporary dilution effect, and to keep our leverage between 1x and 1.5x. Today, I'm very proud and honored to say that we significantly over-deliver all these commitments. I'm even more proud and honored to underline you that these results were achieved in a completely different scenario compared to what we expected. We did not expect a pandemic, we did not expect the huge disruption in the supply chain of the last three years. We did not expect inflation rate of a magnitude which only my parents could recall. Notwithstanding, we deliver, and we deliver well above our expectations.
First, we deliver sales growth commitment, widely overcoming the EUR 2 billion target for 2022, and moreover, almost doubling the 33% target that we have given in 2020. Between 2020 and 2022, we recorded a growth close to 52% with a compounded average growth rate of 15%. An outstanding result based on two of our most important group capability: operations and acquisition excellence. Through our never-ending focus on operation, we deliver a 10% organic growth in the period compounded. Through our never-ending focus on acquisitions, we acquired and integrated companies that brought EUR 360 million of new sales to the group. Second point, we delivered on our profitability commitment far above our threshold of 22% indicated in 2020. In reality, in 2022, we protect the record group margin achieved of 23.7%.
To be precise, 2022 EBITDA margin has been 2 bips higher than the record margin achieved in 2021 on a reported basis, and 50 basis points higher on a like-for-like basis. Something that is absolutely not granted considering all the threats to profitability we faced. In the group scheme of things, the acquisition of companies with a dilutive impact is almost normal due to the profitability excellence level that we have achieved. Proudly, I can say we faced and we overtake all these difficulties reaching outstanding results, and we did all this without hampering our financial strengths. We remain comfortably in our leverage guidelines of 1-1.5x EBITDA.
In the meantime, we push the right balance between supporting the growth, considering CapEx and acquisition, we invested almost EUR 700 million, and delivering our commitment to shareholders with more than EUR 250 million between buyback and dividends. We over-delivered what we committed ourselves, both on February 2020 and February 2022, therefore today, 15th of February, 2023, it's time to commit ourselves again for the future, for 2025. To commit ourselves to what it is in our D&A, growth and profitability excellence in a financial balanced way. In details, we expect a total growth of 25% between organic and external evolution. We expect the confirmation of our level of profitability excellence, considering the possible dilutive effect that acquisitions may have due to the fact that we represent the excellence.
To share with you our internal approach and point of view, I will refer again to the analogy I used last August when we commented the first half results. With 23.7% in 2021, we reached the Mount Everest in terms of profitability. With 23.7% in 2022, we built a bivouac close to the flag we planted last year. The results of White Drive integration plan, the most important acquisition we did in our history, proved that we can target bigger companies and more complicated integration processes than in the past. We will not give up looking for the usual candidates, but for sure, we can raise the bar in terms of target, dimension, and complexity. Obviously, acquiring something bigger and probably less profitable would have a bigger and longer impact in term of margin dilution.
Summarizing, we are now on Mount Everest. It could happen that we land on K2. In any case, we will stay at the top and we will start climbing again. Third commitment is to maintain the financial balance with a leverage in the usual range between 1 and 1.5 times EBITDA. The usual range with the usual balance approach in terms of capital allocation. Group cash generation will be dedicated to our commitment to growth and to shareholders. To grow through expansion of our production capacity and through acquisitions, to shareholders through dividend and buyback. We consider all these targets fair, considering that nowadays external landscape, which is characterized by clearer skies compared to previous years, even if still marked by the presence of some clouds. Please do not misunderstand our words.
Even if there are elements which give us more confidence, this will not change our commitment that is not only in line with the one of previous years, but also even stronger. In the last three years, this group faced difficulties never seen before, despite that, we reached the best organic growth rate for sales and the highest EBITDA margin of group history. It's of course, our managerial duty to always work for the top. These are our commitments for the period 2023, 2025. Obviously, we will work to go on with our path already in 2023 in terms of growth, profitability consolidation, cash conversion improvement. In details, in term of growth, considering the backlog that nicely weighed on our shoulder and January start, we are expecting for 2023 an organic growth of at least 5%, the growth of a normal good year.
Allow me to share with you some remark. As of January end, group backlog is consistent in term of dimension with the one of previous months. Vice versa, there is a nice difference in terms of a slight but consistent increase of the weight of the Water-Jetting backlog. We need a normal year during which we can fine-tune operations, focusing on production efficiency and not only on production speediness and growth. As already anticipated last November, adding answers to one of your question, our sales expectations incorporated a possible adjustment of selling price policy. We were fair, as I will explain later, in our meeting. In 2022, in managing prices, we will be fair again in 2023. It goes without saying that the group scouting activities for new acquisition are always ongoing.
Profitability, as far as today, 23.7% is the top ever reached. It's our duty to work as much as we can to protect and consolidate this result. What we did in 2022 is the evidence of our capability to promptly react to extraordinary exogenous events, thanks to a consistent and steady focus on operation. As part of today, there are less elements to be worried about compared to one year ago. In terms of inflationary trends today are influencing labor cost, seems reverted in terms of raw material and energy. In any case, we should not lower the guard because the recent history taught us how things can change suddenly. Cash conversion improvement. It's easy to assume that cash result of 2022 will not be of full satisfaction for those who do not share our industrial approach to inventories and CapEx management.
Approach which was enhanced during 2022 as Group reaction to support production continuity and profitability. Skies are clearer. Now what we have at our disposal in terms of raw material and spare parts is in line with expected sales evolution. Therefore, we do not envisage the need to keep our approach so severe. We anticipated you this change last November. You can already see the results. While in the fourth quarter 2021, we did not generate cash, in the fourth quarter 2022, we generated around EUR 25 million of cash flow. After this long overview on the future, please allow me to share with you the elements of 2022 results we consider the most important. Organic growth evolution, profitability results achieved, development of Group CapEx production expansion plan. Last but not least, a short overview on recent acquisitions. Organic growth.
After the drop of almost 13% in 2020, in 2021, we saw a massive rebound, almost 20%, plus. This year, organic growth was close to 14%. This 14% is source of a higher satisfaction compared to the previous +21%. The easy comp effect was for sure lower and was achieved in a much more difficult environment in terms of raw material availability. This result was driven by both price and volumes. Very roughly, I can say 6% in terms of price effect and 8% in terms of volumes effect. As usual, I'm suggesting you not to compare division organic growth, otherwise you will be misled by cyclicality different impact on the two businesses, and even more by different business characteristics.
For example, how long it takes to sign a contract with a customer or how long it takes to produce what order in the two divisions. Therefore, we are really proud of the +8% of Water-Jetting, as we are proud of the +16% of the Hydraulics division. How did we achieve this 8% and this 16%? In another way, I'm repeating myself again, how did we transform orders in invoices? We transform order in invoices thanks to the production continuity, the capability to keep production going despite the previous mentioned problems in terms of raw material and components availability, and pandemic resource in the first months of last year.
Of course, the production flexibility, that means the fast support we can get from high quality and trustworthy suppliers with whom we have been able to build relationship in the past. Second point, profitability results achieved. In this case, I would like to reason not on full year data, but specifically on the fourth quarter data, since this latter data allow everybody to make a fair comparison due to the fact that the fourth quarter 2022, and in the fourth quarter 2021, White Drive does not create consolidation distortion, and there are no accounting impacts on IMM Romania file. At the end of the day, 210 basis point improvement is the clear evidence of the capability of Interpump to overcome massive inflationary trends.
We envisage this inflationary trend last autumn. We adjusted selling price in a consistent and moreover, in a fair way, which means to find the most suitable mechanism to transfer inflation according to almost each customer, and to identify the proper amount of increase. We work closely with our customer that are partner. We did not squeeze them. In one year, we successfully managed the inflationary trend. One year could seem a very long period from the financial world, for the industrial world we belong, it's just the opposite. Successfully managed means improved margin, not keeping them flat. Third point, the CapEx plan. We launched on a production capability enhancement plan in 2021 for both division. This is the reason why for the second year in a row, you see a CapEx to sales ratio of around 6%.
In 2021 and in 2022, we implemented the first phase, buying suitable spaces and raising buildings, this create a sort of extraordinary peak concentrated in these years. Now we are entering in a second phase, fitting buildings, therefore we are expecting to gradually move back to group usual CapEx level between 4% and 5% of sales. We share with you two examples of what we are doing, one for each division. Last but not least, acquisitions. I will start with White Drive, which was the most important group acquisition, we'll elaborate also on Reggiana Riduttori, because we believe that these acquisitions are the ones which, at the best, shown the implementation of group acquisition strategy in the last three years. White Drive is undoubtedly the most important acquisition of the group. Please let me elaborate how we define the concept of importance.
Importance is for sure correlated to sales dimension. Considering Interpump D&A, it is even more correlated to the cultural and managerial approach. A group who base its growth and this profitability strategy on decentralization and an entrepreneurial approach among its managers, both a business line of a centralized conglomerate. White Drive was the test to demonstrate to ourselves not only the capability to digest something bigger compared to our usual standard, but moreover, something very far away from our mindset. We passed the test. In the fourth quarter 2022, White Drive reached the 21% EBITDA margin threshold of hydraulic sectorDriven activities in Poland, which mean almost 60% of total White Drive sales. I'm sure you recall that our target is to make White Drive profitability at least in line with the hydraulic profitability.
Finally, in the fourth quarter, exactly one year later compared to the acquisition closing, we reached 21%. Now we will work in the next months and quarters to improve this achievement, which has to be full and consistent quarter after quarter. How did we do it? Moreover, how will we do it further? We did it having shared the group best practices in terms of operations and inventory management and CapEx industrial approach. This suggested us, as we anticipated last November, rationally and intentionally suspend all activities correlated to cross-selling opportunities. Production capacity increase and sales and customer experience improvement deserve the priority. This decision paid off with a 21% margin in the quarter. How we will do it further? We will do it going on exactly on this path, with even a stronger focus on U.S. operation that today are still lacking behind.
Obviously, the transfer of four new production lines created to this part of business more difficulties and inefficiencies compared to Poland, but now this step is completed. The fourth line simply need some components and additional machinery to be operative. Focus on profitability can be fully exploited. Some focus in Europe, where this year we will implement a reorganization between German and Polish businesses. The second example is Reggiana Riduttori. That is much smaller, it was only EUR 80 million when we bought it, but with a crucial strategic role because it allow us to enter in a completely new business for the group, the power transmission one. This company was the perfect trigger and the perfect driver to fuel group growth with further acquisitions. Transtecno in 2020, Berma and DZ Trasmissioni in 2021, Draintech last April.
It was a growth complemented with profitability improvement, with the margin growing from 20% to more than 24% in terms of EBITDA margin. To elaborate the last 2022 commitment, consolidate and align group sustainability activities and processes, I hand the floor over to Ms. Cugnasca.
Thanks, Mr. Marasi. The presentation of our ESG journey last October was a very important step for our group because it was the first project defined and executed at group level. It reflects our effort to incorporate, balance, and leverage some of the most important group key success factor. The diversification by product, geography, and application sector, the business model heterogeneity, a growth strategy based on both organic and M&A, with the soft integration policy for acquired company as one of the milestone of the M&A strategy, powerful and consistent focus on operation and execution. We share with you much information to explain our 2023, 2025 journey and our 20 action, we discuss them in depth. Today, I would like only to clarify three points.
The starting point to elaborate the journey was based on a sample of the most important group manufacturers entities. Referring to 2021 group data, the sample covers almost 65% of sales, around 60% of productive site, and around 70% of employees. It was validated by all the group entities, and its execution embraced the entire group. In term of our environment, 2023 will be the cornerstone to define our carbon neutrality strategy, will include the entire group perimeter and all Scope 1, 2, and 3, with aim to reduce the impact of the group on climate change. Going to details of governance, we are working on the 2 track activities. From one side, we have 6 G target in the plan.
Among them, the establishment of board ESG committee, the definition of the succession plan, and the consolidation of the tax compliance are the most important, with the first two one to be executed this year. From another side, we have the fine-tuning of the first part of the remuneration policy scheduled for 2023. Please do not mislead by the timing and by the role of the next April annual shareholder meeting in this regard. The two mentioned ESG action planned for 2023 will have the annual shareholder meeting as a trigger, better as a starting point due to the group of our renewal. After their definition, the new board and the new committees will start to work on this action to execute them before year-end.
The fine-tuning of the first part of the remuneration policy is something on which we have been working since many months, and that will be finalized and disclosed on the annual shareholder meeting. After this short clarification, I'm asking Mr. Marasi to conclude our overview on 2022 results and 2023-2025 commitments.
Thanks again, Ms. Cugnasca. The achievement, let me proudly correct myself, the overachievement of all the commitments taken in recent years and the beauty of 2022 results allow me to be very short and very optimistic about the future of the group. Once again, Interpump Group shown its operational strength and therefore its resilience. These features are inside our D&A, and on them we leverage to make concrete our never-ending aspiration to growth and to profitability excellence. Thank you.
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. Anyone who has a question may press star and one at this time. The first question is from Matteo Bonizzoni of Kepler. Please go ahead.
Thank you. Good afternoon. I have three questions. The first one is as regards the margin evolution, which we observed in 2022 compared to a normal year. In 2022, the fourth quarter was the most profitable one with a margin of 23.9%, better than all the previous three quarter. Typically Q4. Some question is as regard to the figure below EBITDA. EBITDA in Q4 was a clear beat, the rest of the P&L not. EBIT and profit were below, I think, my estimate, but also most other estimates. I want to ask, there was a big item, negative item between EBITDA and EBIT, around EUR 9 million in addition to depreciation.
There was this EUR 9 million drag to the EBIT and so also to the net profit. Can you comment about that? In general, if you look at the P&L, both other revenues and other costs grew much more than the rest of the P&L items. Can you comment on other revenues and other costs during 2022? Third and last question about debt and interest charges. We clearly saw an increase of interest charges already in Q4. I don't know if it is all related to pure interest charges, so cost of debt or there is also something else like Forex or other things. My question is your gross debt still, let's say 100% or largely predominantly at a variable rate?
In general, can you provide the guidance for the interest charges in 2023, assuming an average cost of debt, whatever you want, but I would say between 3.5% and 4%, which I think is reasonable? Thanks.
Thank you, Matteo. Regarding margin evolution in the different quarters of 2022, I would comment that the evolution that we have seen is really interesting because of the reasons that you have mentioned. The explanation of this evolution can be found in the progressively entrance of the price increase that we have transferred to the customers and the evolution of White Drive that has been improving during the year, but in particular in the fourth quarter, its results. Having fully transferred the price increase effect and having consolidated the improvement of the results of White Drive brought a usual weak quarter, or weaker quarter like the fourth one to the highest level of the year, 23.9%.
In particular, if we compare with the 21.8 of last year is a super satisfactory result, more than 200 basis point more. Regarding the expectation for 2023 in terms of margin, I'm not able to say if we will be able to exceed 24%. It is always very difficult to increase targets considering the level of excellence at which we stay. For sure, we will work harder to protect, to consolidate the previous results. That is also what we announced and what we had as a guideline for last year. For us, maintaining this level of excellence is the goal and for sure we see that we have all the possibilities in place to do this. I jump to the debt and interest charges.
I confirm you that, almost entirely our net financial position is, on a variable rate. The interest charges for next year, if we consider 3.5%-4% interest rate, is something that will stay between EUR 25 million and EUR 30 million. EUR 25 million, I would say. I don't have a clear answer regarding the EUR 9 million between EBITDA and EBIT. I ask my colleagues if... Elisabetta, do you have some more comment on this?
No, we do not have posted any strange things, if you're asking about write-off or something, like this.
The next question is from Domenico Ghilotti of Equita. Please go ahead.
Hello?
Hello, Domenico.
Okay. You hear me. I have a couple of questions. First, just to a clarification on the comment you gave on the price, on the price, for 2023. I'm not sure if you are, let's say, if you want to stick to the prices that have been applied or if you are ready to give back some of the, let's say, of the benefit that you received given the disinflationary environment that we are in some way seeing on, at least on raw materials and logistics? Second question is, well, on the White Drive integration. You have achieved 21%, so for sure. This is a driver. I'm trying to understand on the profitability for 2023, because you have 5% organic?
That's good, say, contribution in general to the profitability. You have White Drive, a full integration. That is okay. It's organic, but, it's starting from a bit dilutive, contribution in 2022. You have an environment, is that a more or less? I wonder if you see any particular stress on the labor cost to justify a decline in the margin.
Okay. First of all, we are not seeing any decline in margin. we have not commented this at all.
Mm-hmm.
It is true what you said, that with a 5% organic growth, at least, and a catch up on White Drive profitability, we should have and we will have a good support for protecting and consolidating our margins in 2023. Regarding White Drive integration, we have commented on data, so results are encouraging. We still have to work and to improve the results of the American side of the business. Overall, the results of the fourth quarter are absolutely in line with our expectation, and we are very happy and proud to have delivered the 21% margin. Your first question was on price.
Prices.
Yeah, prices. It depends. In 2023. In general, let's say in general, we want to have a fair approach. We have not benefited in 2022 in transferring to the customer more than the cost that we have had. We have been very transparent and very fair in transferring more or less exactly the inflation on our raw material and energy cost. We are prepared to give back something whenever will be possible and whenever will be rationally demonstrated. For example, I have in mind a couple of examples of energy surcharge that were applied on the fourth quarter 2022 that will not be maintained in 2023, because energy price went down significantly in the fourth quarter. This is just a way of being honest and transparent and real partner with your customer.
We don't want to speculate, and we didn't want to speculate last year, even if we had many cases to do this. We want to maintain a fair approach, and we are prepared to give back something whenever we will be possible. For this reason, we do not expect any significant price variation. We can assume now that the price effect from 2023 will be between 0% and 2%.
Okay. You are not saying that you are benefiting, say, significantly from, say, increasing prices that was not matching any cost increase. You were, I'm not saying overcharging, but say, moving ahead of the price increases and so.
Correct.
-with an extra margin in 2022. No, just say, "Okay, I don't want to get additional, say, advantages if there is a decline in cost.
Correct.
Okay.
The next question is from Michele Baldelli of BNP Paribas. Please go ahead.
Hi. Good afternoon to everybody. I've got a couple of questions on the D&A front. Just to understand on an annual basis, what is the level of the D&A for the right of use? The second still on D&A, what has been the impact or what is the total of the PPA into the D&A deal? Finally, on the White Drive acquisition and the recovery of margins, in the last conference call, you gave a certain picture. I just wanted to understand if that picture is still valid or some of the benefits on the margin expansion of White Drive has been brought forward into 2022. If you can, let's say update us also on that statement that you made. Thank you.
I can start with this last point. We commented several times regarding White Drive margin, that we had as a target to have an EBITDA margin at least aligned to the one of the Hydraulics division of the group. Our real idea and our real feeling is that in a midterm perspective, White Drive may have a profitability performance aligned to the one of the whole group, in reality, a higher performance than the Hydraulics division.
We confirm these expectations, we confirm these comments, and the results of the fourth quarter are exactly supporting this feeling and this positive mood that we have towards the integration of White Drive. Regarding the D&A of the right-of-use, I don't have a clear detail. I don't know if you, Elisabetta, may support me on this.
No, not possible. We will have to follow up on this.
It may maybe also for the PPA.
What's that?
The purchase price allocation D&A.
Purchase price allocation of White Drive, you mean?
Yes, yes. The D&A related to the purchase price allocation. You need also this item, and you will come back to us for your-
Yeah. Maybe we should come back later on because I do not understand clearly the question, and I don't have the details.
Okay. Thank you.
The next question is a follow-up from Domenico Ghilotti of Equita. Please go ahead.
Yeah, I have three questions. One probably is, say, just a follow-up on the previous question in the sense that we have seen quite a significant pickup in D&A in Q4, and obviously we see also higher CapEx over the last two years. I don't know if you can help us in guiding on what can be, say, level of D&A for 2023. What can be a reasonable assumption for 2023? The second question, you sounded on the M&A. I'm not saying ready, but because you are already ready, but, say, eager to do something larger than usual.
I wonder if you have something that say on the table, apart from, say, the general comment, that you have something on the table that is actually, say, larger than usual. The last question is on the organic growth. You were mentioning it's around or at least 5%. Can you give us a sense of if you see quite balanced growth for the two division or you see maybe this year Water-Jetting exceeding the Hydraulics? I leave the comment to you.
Yeah. Regarding D&A, it is clear that the evolution depends on the investments and the CapEx that we have made in 2021 and in 2022 in particular. I believe that we can say that in 2023, the target or the expectations for D&A will be around EUR 100 million. Second question was on M&A. M&A, I've commented several times, and I confirm now after the very good results of the first year after the acquisition of White Drive, that we are prepared. We have the strategy, we have the commitment, and we have the managerial resources to evaluate and to address acquisitions or opportunities that are larger than our usual average or usual targets. It depends. We have many dossier on the table.
At any single time, we are following, and we are considering or discussing different dossiers and different targets. You never know. That is not in our tradition, and it is not wise to give you any target or any further comment. What is really important to comment is the strategy of the group that remains unchanged and the willingness to go ahead with our usual approach and being prepared to evaluate something larger and even more complicated in terms of integration, like the White Drive case demonstrated. The third question was on the organic growth by division, I would say that we should expect a more balanced growth between the two divisions.
If you go back to 2021 and 2022 results, you will see a significant overperformance of the Hydraulics division in comparison with the Hydraulics division. For 2023, I'm expecting a far more balanced evolution, a far more balanced growth.
Okay. Thank you very much.
The next question is from Bruno Permutti of Intesa Sanpaolo. Please go ahead.
Yes, good evening, everyone. I have a few questions. The first one concerns the medium-term guidance. It is reasonable to assume that in this guidance, more or less, one half should come from organic growth and the other 50% from potential acquisitions. The second one relates the EBITDA margin target that you gave for 2025. It seems to be very conservative, looking at your past performance. It would imply a quite low profitability of the acquired companies, I mean, between 10% and 15%. If we assume that your profitability for the rest of the group will remain stable, at least stable at the current level.
I would like to understand if this is a very conservative approach or exactly what's the reason for this? The third question, concern the tax rate. It was a little bit high in 2022. I'd like to understand if there is any particular reason for this and what we have to factor in our models for 2023 and The following years.
Okay. Regarding the midterm guidance, I confirm you that our approach has been very conservative. This is part of our D&A, this is part of our history, and this very conservative approach is the one that we have always used in the past. We have been very conservative in 2020, when we announced the first three-year plan, and we significantly overachieved this target. Of course, our aim is to overachieve this three-year target once again. You never know. You never know, in particular, the potential dilution of the M&A. It is correct that we have been cautious also on the profitability of the company that we consider to acquire. What is more relevant and more important, our aim is to compromise and to over-deliver.
This is what we should keep in mind. Regarding tax rate, I believe that last year tax rate was something like 27%, and it has been a couple of percentage points higher than last year. We expect to be less in 2023 than we expect that it will be closer to 25 than to 27.
Okay. Thank you. If I may, just one more question concerning the seasonality. In 2022, we saw a very inexistent seasonality in terms of profitability between the quarters. I'd like to understand if you have a different view on 2023, if you see some factors that could balance in a different way the profitability seasonality in 2023.
Okay. No, I believe that it's better not to speculate on seasonality and on quarterly evolution of the margins. I believe that, like I've commented many times in the last couple of years, is much, much, much more important to look at the yearly results, because monthly results or quarterly results may have some variance. Even if we demonstrated that in reality, the fourth quarters of 2023 were almost... sorry, 2022, were almost equal. Generally speaking, I'm much, much more impressed by the stability of the results of the last 4 or 5 years. If we start from the 23% EBITDA margin of 2019, we go to 22.7% of the terrible year of 2020. We jump to 23.7% of 2021, and we maintain the 23.7% in 2022.
I believe that this consistency and this stability in results is what really matters. I don't care too much about the first quarter or second quarter, profitability evolution, and also because we do not see particular seasonality.
Thank you.
I don't invite you to expect significant differences or a rollercoaster between the different quarters of the year.
Thank you.
The next question is a follow-up from Matteo Bonizzoni of Kepler. Please go ahead.
Thank you for this follow-up. My question is if you can comment on an indicative growth of your order book now that we are mid-February, year-on-year, compared to the same period of the last year. If it is correct to imagine that, this 5% organic growth target for the year could break down into a high single digit growth for the first half, and then clearly the second half is probably more open in terms of backlog coverage. Let's say that it factors in a significant slowdown of the order, the organic growth in the second half compared to the first half, in order to meet this 5% for the full year. Thanks.
Yes. One second. Regarding the increase of order backlog, I say that at the end of January is around 20% in comparison with January last year. It's still significant. The absolute value remains at the top level, and we are very happy about what we have seen in the recent months and the recent weeks in terms of order intake, a new project discussion with the customer. The second question was related to? If you can repeat, Mateo.
Oh, no, you have already, let's say, answered. If you have a 20% growth of the order book, it's clear that the first half, I mean, if you have a 5% target in a full year, the first half could be significantly better than that, or I'm wrong?
We will see. It's clear that we have a far better visibility on the first half, in comparison with the second half. Orders that we have on our backlog cover a significant part or a significant number of months, in particular of some, in some of our companies, then it is correct, it is true that we have far better visibility on the first half of the year and lower on the third and fourth quarter.
Okay. If I may just follow up. Are you observing any slowdown in any specific end market? Maybe, I don't know, construction equipment or whatever, or not. On the other side, do you continue to have a very strong intake in some? I remember in the past you mentioned agriculture as a market in 2022, just to have a little bit of color of the different end markets and maybe geographies as well.
Yeah. We do not see significant slowdown anywhere. We see a very strong demand in almost every market, in almost every application, with the only exception of China that we have commented several times. Agriculture for sure remains super strong, but also many other application or many other businesses are very, very important in terms of growth and in terms of order. The real beauty is that the growth and the demand from the market is really balanced between the different companies and the different divisions of the group. This, of course, help to focus our efforts on exploiting efficiency and optimizing margins. In terms of geographies, apart China, any other country or region is growing double digit in comparison with last year.
Both if we analyze the fourth quarter and the full year.
Okay, thank you.
The next question is a follow-up from Domenico Ghilotti of Equita. Please go ahead.
My very last question. Would you consider restarting the buyback, or do you want to keep the same cash on hand for any reason, M&A or whatever?
We will see after the shareholder general assembly, generally speaking, we do not see particular reason to not to rethink about the buyback during the year. It will depend on the opportunities that we will have in terms of M&A, of course.
At least working capital would not be a drag as it was, let's say, in 2022, if I understand.
Absolutely. You are absolutely correct.
Okay.
We expect to have a significant cash flow generation this year, of course.
Mm-hmm. Okay, thanks.
The next question is from Alessandro Tortora of Mediobanca. Please go ahead. Mr. Tortora, your line is open. Please go ahead.
Yes, hi. Good evening, everybody. I have three. Can you hear me?
Not so well.
Okay, now?
Let's try to go ahead, Alessandro.
Yeah. Thanks. The question is, let's say three questions, sorry, if I may. The first one is related just a follow-up on your question on your point on White Drive. Clearly there's a strong price effect in the last part of the year. What I would like to understand is if we can assume some carryover of this positive price effect also into 2023, meaning that White Drive should have a higher price component on the, let's say, organic growth for 2023, considering the strong half sales increase in Q4. The second question is just a clarification on D&A.
When you said that you expect something around EUR 100 million D&A, does this number include the, let's say, D&A related to the IFRS 16? The last question is on, let's say the performance by region. Can you comment, let's say, on the, on the past performance, but entering now in 2023, do you see, let's say, significant differences, for instance, among Europe and, let's say, U.S. or basically you see a positive, let's say, trend for both markets? Thanks.
Regarding the carryover for White Drive, I would say that the carryover is more related to the recovery in terms of manufacturing efficiency of the company.
Mm-hmm.
Instead of expecting a carryover on price increase application. It's much more related to the efficiency that month after month we are improving.
Okay.
Second question, the D&A of EUR 100 million certainly includes the IFRS 16 effect. The performance by division By region, sorry, we do not see significant difference between Europe and US. We confirm that both region are performing very well and the demand is strong in both area.
Okay. Okay. Just if I may, sorry, quick follow-up on, let's say your comment on the CapEx trend also for the coming years. Basically you reiterated that we should come back to, let's say, something in the range between 4% and 5%, or let's say we still need to think about, let's say, the upper end of this indication considering that 6% on safety achieved last year.
No, between 4% and 5%, in particular, if we look at the 3-year plan and the
Mm-hmm.
-year, period is something that, is, enough and will be enough, to complete, our investment, plan, for new buildings, and to maintain a state-of-the-art, manufacturing plan and efficiency.
Okay, thanks.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Mr. Marasi, there are no more questions registered at this time.
Okay. Thank you very much. Have a nice evening and speak to you in May. Bye.
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