Good morning, this is the Chorus Call Conference Operator. Welcome, and thank you for joining the Orsero first half 2024 results web call. As a reminder, all participants are in listen-only mode. After the presentation, there will be a Q&A session. For operator assistance via web call, please press the headset icon on the bottom left side of your screen. For the conference call assistance, press star and zero. At this time, I would like to turn the conference over to Mr. Paolo Prudenziati, Chairman of Orsero. Please go ahead, sir.
Hi, good morning to everybody. Before I pass the word to Raffaella, I just would like to underline a couple of points from a bit broader point of view. The fact is that after the unique year, 2023, we knew we had in front of us a normal year with a shipping normalization. But more important, I think we should have a view of what the company was two years ago, when we've been quoted in the market, where our total turnover was not even EUR 1 billion. The total EBITDA was hardly reaching EUR 40 ,000. Last but not least, the importance of the shipping business was the vast majority of our EBITDA was floating between 70%-80%.
After so many years, we have a company 1.5 , roughly, the distribution which is counting close to 80% of our total EBITDA. And last but not least, we have a distribution which is very resilient, very solid in the three major countries. We no longer occasionally surprised from one country to another, so no bleeding market at all, not neither big or small. I think it's very important for the future company and to give a new start. Now, having said so, I would like to pass the word to Raffaella. Thanks.
Good day to all. Let's say that Paolo said the most important things. This half performances are in line with our expectation, especially in terms of profitability, thanks to an improved second quarter distribution result. This year, fruit and vegetable market is generally not very active. Despite less inflationary pressure and lower sale prices, the demand has been still quite weak. However, our distribution did well and achieved an adjusted EBITDA margin of 4.5%, which is still higher than the average in the market. The slight decline in turnover is mainly due to a decrease in banana volumes, but we were also faced a decrease in volume of avocado in Mexico and a not bright citrus winter campaign.
On the other hand, the strong second quarter was driven by a very good performance of exotic fruits and kiwi, confirming our past strategic choice to focus on this product. As far as concerned, the banana volume decrease, for strategic reason, we have decided to stop promoting third-party bananas in the Italian supermarket chain, channel. And our plan is to recover this volume in short time, in a short time with another product. The distribution profitability was also affected by the banana business, which saw the market normalize compared to the outstanding performance last year. Talking about individual countries, they all performed in the same way. Even the latest French acquisition are still performing as expected. Last, a few words about shipping. As forecasted, we experienced a decrease in turnover and profitability due to the well-known market normalization.
In this context, the reefer cargo has maintained an excellent loading factor and a fair freight rate, while the dry cargo is more suffering the market normalization. To sum up, we can say that this is a regular semester, but we think strong enough to allow us to continue working and seek for further growth opportunities. I pass the word to Matteo that will go more in detail.
Thanks, Paolo. Thanks, Raffaella, and good morning, everybody. I will go a bit more in details on the figures. Starting from the net sales, the first quarter ended up with EUR 744 million revenues, decreasing by 2.5%, compared to the first half of 2023. As Raffaella said, actually this effect is really well understandable and it's based on two main issues. One is related to third party banana volumes, and second one is the normalization of the shipping. If we take out on the distribution, the effects related to bananas, all the rest is growing. It's not growing strongly, but it's growing in accordance way with the market condition.
Adjusted EBITDA reached almost EUR 41 million, decreasing by 30% compared with last year, and this effect, as for the sales, is strongly related with the shipping normalization, first effect, and second one, to the banana profitability. I remember, and I want you to focus on the fact that last year, the banana business in Europe was really, really exceptional in terms of profitability. Then the effect on profitability goes down to EBIT and to adjusted net profit, so EBIT stands at EUR 24.2 million compared with the EUR 42.8 million last year, and adjusted net profit stands at EUR 16 million, compared with EUR 33.4 million, 2023.
Net financial position stands at almost EUR 130 million, equal to the level of 2023 at this time of the year, and excluding IFRS 16 is almost the same. We stand at almost EUR 70 million in line with the figure of 2023. We can pass to the next slide, please. If we go a bit more in detail, bridging our net sales comparing 2023, H1 2023 with H1 2024, we can see that distribution is down by EUR 9 million or 1.3%.
To give you one detail, the decision we took on the Italian market to stop commercializing third-party banana brand on the supermarket accounts for 16 million EUR as a reduction for the H1. So as I was saying before, if we take out from the trend this decision that was taken by the management, actually the sales have a positive effect on the H1, and we are convinced that we're gonna continue to recover that figure through the years, and the strategic move was the correct one to do. If we go to the shipping sales, we have EUR - 11.1 million , or 16%, compared with last year.
This effect is mainly connected with the decrease in the freight rate on the fruit volumes, and obviously the residual part on the dry cargo rate. If we go to the Adjusted EBITDA, we can see that the distribution is down by EUR 6.8 million compared with last year. That counted for 38.7 million, and the effect is totally related to the banana business and to a difficult citrus campaign, winter campaign. Shipping accounts for the highest effect, EUR 12.2 million, and this is totally related to the two things: dry cargo freight rates and fruit freight rates. We can go to the next slide, please. Bridging the net profit, we have no strange effects.
Adjusted Net Profit H1 2023 was EUR 33.4 million, bridging to EUR 16 million H1 2024. The main effect is related to the decrease in the Adjusted EBITDA by EUR 80 million. D&A and provision and financial and share of profit are in line. Tax effect is positive, obviously, given the fact that we lost the biggest part of our profitability related to shipping activity, and the shipping activity has a very attractive tax rate. The impact on the net profit is higher compared with the EBITDA effect.
We have no major adjustment on H1 2024, and are related basically for provision for employees profit sharing in Mexico and France, and the shutdown of a little site in France, Sol'or warehouse, that we decided to shut down to optimize our operation on the French market. We can pass to the next slide, please. Bridging the net equity from full year 2023 and H1 2024. Here as well, the two main effects, relevant effects are the net profit of the period reported and the dividend paid to the Orsero shareholder in May. That counts together for more than EUR 25 million.
EUR 15 million is the effect of the reported net profit, that is positive, but then we have to take out the dividend paid by EUR 10.2 million, and the buyback we perform during the H1 that counts for EUR 0.6 million. We have a negative effect related to the change in minority's interest, mainly related to the payout of the dividend to the Blampin family, that as we all know, is still a shareholder of Blampin with 33%. And then we have a positive effect on the hedging reserves, mainly related to the hedging that we normally do on oil, the new one on ETS, interest rates, and US dollar.
Related to the net financial position, we had a good cash flow during the period, almost EUR 15 million. Net working capital was not really relevant, so it's positive for neither one. We had EUR 8 million operating CapEx. This figure is well in line with the plan of this year. We had the buyback, as we said, on the equity, the dividend paid, and little other effects. So, net financial position at the end of the semester is basically stable compared with the end of last year. IFRS 16 liabilities effects account for EUR 60 million. That is in line with our estimation. So the net financial position reported stands at EUR 129.9 million, almost EUR 113 million. I think we covered the main element and issue regarding the figures, and I will leave the rest of the conference call for any question you may raise.
Thank you. We will now begin the question and answer session. To enter the queue for questions, please click on the Q&A icon on the left side of your screen, and then press the Raise Your Hand button. Please do not mute your microphone locally, and when prompted, make sure that you turn on your webcam in the pop-up window. If you're on the phone instead, please press star and one on your telephone keypad. Once again, if you wish to ask a question, please press the Q&A on the left bar and send the request, or press star and one on your telephone. The first question comes from Gabriele Berti of Intesa Sanpaolo.
Hi, good morning. Thank you for your presentation. Three questions from my side. When you say that the market is experiencing a reduction in selling prices, are you referring mainly to bananas, or are you also seeing a reduction in the prices of other products? Then, I was wondering, what is the expected impact of the dry docking on the shipping performance in the third quarter? And lastly, if I'm not wrong, you should be negotiating annual contracts for the shipping in the next few months. I'm talking about the reefer part of the business. What is the market like here? Do you already have any visibility whether the condition will be at the current level, or do you expect any significant differences?
Thank you, Gabriele, and good morning. I will take your questions. Regarding the selling prices, don't take us wrong, we're not saying that we have a decrease in the selling pricing. Mrs. Orsero say that we don't have any more the same inflection effect, so still the prices are up, even considering the fact that banana business has decreased the pricing, especially on the retailers, on the full year tenders that we are obliged to participate in few countries. But even considering bananas, still we have a price, a positive price effect.
So the issue was more related to the volume than to the prices, and actually, the demand in terms of volumes was not brilliant for nobody in the market, but I think it's something related to the food sector in general terms. The good things is that we're still seeing a healthy dynamic on the pricing of all the rest of the fruit, excluding banana. But to tell you the truth, even banana this year, the trend is not bad. The trend is correct. The issue is that last year was really out of the normal range. So it's not a bad year on bananas, even with pricing decreasing, the rest of the fruit, still we see an inflationary push on the rest.
Second one, dry docking on the shipping. Actually, we had the first six months of the shipping were not affected by any dry dock cost. Obviously, the dry dock is split in two, let's say, main areas. A part of the cost will be capitalized, all the maintenance, extraordinary maintenance that goes on the ships, on the hull of the ships, and all the establishment that we have to do by regulation, and this counts normally for two million per ship, and then there's a part related to the fact that we are obliged to maintain our service, so the two ships will be dry docked, or actually, were already dry docked during the summer.
And we have to hire and to charter new ships in order to maintain our service. So this impact will be between EUR 1.5 and EUR 2 million . This is the estimation. On the annual contract, actually, it's not really the timing to renew and to rediscuss the contract. We are gonna make it between, let's say, December, during the month of December, normally, the hot month of the freight rate. At the moment, we are not seeing an additional pressure on the freight rate.
Normally, during summer, if the rates are too high compared to the demand, we see on the market some volumes going away from our ships, because some competitors are offering really attractive freight rates on the spot market for the fruit as well. This summer we had no signals of this kind of dynamic. Our feeling is that the bottom is reached. It's too early to say if next year we will have a positive effect on the freight rate. If we will have it, we are not expecting an enormous bounce, but it's possible that we will be able to slightly increase the freight rate on the fruit.
Related on the Dry Cargo, the situation is slightly different because we already reached the bottom worldwide on some areas. For example, east-west transit, the rates grew a lot over the past three, four months. Actually, in our niche, we are starting to increase a bit the rate of the Dry Cargo, so we see a positive dynamic there. It's not going to return, obviously, to the levels of 2022, but end of 2021, 2022, 2023, but for sure, the situation has changed in positive way compared to the start of the year. I hope I answered your question.
Thank you, Matteo.
The next question, sir, is from Andrea Bonfa of Akros.
Hello, good morning, I hope you hear me?
Yes, Andrea, not very well b ut I will try.
Okay. Good morning to everybody. Very quickly, you mentioned your press release that, I mean, your free cash flow generation is allowing you to build the resources for strategic initiative, which are, I believe you're referring to potential M&A. If you can elaborate, your latest thought on the topic would be useful, I mean, where are you looking at, and things like that? Thank you very much.
Okay. I got the question. Actually, we are working on different strategic project. We are working on some organic project, enlarging our facilities and enlarging our distribution in the core market. And this is for us, it's our project that we always like to pair with the M&A project. Regarding M&A, we're studying a few things, even out of our core market. Actually, we're not in a stage where we can disclose, or it won't be helpful for you to disclose at this stage the situation where we are, but we have some ideas. We have to work on it.
It's gonna take two more months, and it's not given that we will achieve our target, but we are active. Situation of the balance sheet is healthy, as you can perfectly see. Profitability is there. Reputation of the company is really high in the sector, so it's easy for us to get in touch with good companies and with good shareholder or manager to discuss with, and the situation of the interest rate is getting better, so even on the financing, the situation is easing, and we hope over the next few months it will be even better .
So we are ready, we are studying, we are approaching, we have ideas, but obviously, we have to find the right condition, the right company, and the right people. We always intend to perform an M&A with the same philosophy that we used in the past. So, we know it's something that we like. We are sure it's a part, a big part of our growth plan. We are not shy on M&A, as you know, but we have to be convinced, not only because the market is expecting something from the company, but we must be convinced that long term the M&A deals create values for the company, for the business, and for the shareholders.
Okay, thank you very much.
As a reminder, if you wish to register for a question, please press the Q&A button on the left bar and raise your hand, or star one on your telephone from the audio conference call. For any further questions, please press Q&A on the left bar and raise your hand, or press star and one on your telephone. Mr. Prudenziati, gentlemen, there are no more questions. Oh, excuse me, sir, there is a question registered from Davide Coppini of First Capital.
Matteo, can you hear me?
Yes, we do.
Okay, perfect. So, well, first of all, congratulations for the results. In my opinion, very strong results in the first half of the year and in line with the guidance. I have only one question about the free cash flow generation, and what do you expect in the second half of the year in terms of free cash flow? What is your sensation on that?
Ciao, David. Thank you for your comment. I agree that the results compared with the market situation are strong, and we are satisfied, especially on the distribution. That actually is where we really control the business. On the shipping, we do control at a certain level, obviously, operational level, but then we have to stay on the market, and it's volatile, and this is what it is. Going to your question, second half of the year normally has a good cash flow generation profile.
We will have the biggest portion of our investment, because if you remember, we have, when we have planned, slightly over EUR 20 million investment for the, for the year, and we EUR 21.5 million, if I'm correctly remember, and actually we had EUR 8 million in the first half. So we don't expect, apart of the fact that the investment will be higher compared with the first quarter, the business is continuing to generate cash. We have no particular elements at the moment to imagine a better flow generation. The business is flow is. The flow of the business is correct. The distribution always right. Cashflow.
The only thing is about the working capital, because, as you know, on the cutoff date, given our volumes and given our cash in and cash out dynamics, now the company is almost EUR 1.6 billion. So each time you close your net financial position end of the period is really depending; the EUR 7 million-EUR 8 million can be more or less, depending on the cutoff date. It's not really... We understand that for the, let's say, the figures and the reporting, it's relevant. Actually, for us, it's not super relevant because you can have some advantage sometimes or some disadvantage other times, but the dynamics is always fluid and positive. We have no issue in cashing in our credits, no strange elements, so nothing more to comment.
Okay, thank you so much.
Once again, for any further questions, please press the Q&A on the left bar and raise your hand or star one on your telephone. Mr. Prudenziati, there are no more questions registered at this time, sir.
Okay. Thanks to all, and, let's talk in two months from now. Thanks, everybody.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your devices.