Good evening, and thank you very much, all of you, for taking the time to attend this 9-month 2023 results presentation. I am Ana Fuentes, IR Director. Before proceeding, let me refer you to the disclaimer on slide number 2 of this presentation that has been posted in our website, and will set out the legal framework under which this presentation must be considered. The conference call will be led by our Executive Chairman, Mr. Francisco Riberas, and our CFO, Mr. Ignacio Mosquera. At the end of the conference, we will open up for our Q&A session. Now, please let me turn the call to our Executive Chairman.
Okay. Good evening, and thanks for attending this call. First of all, let me say that, for the results up to September 2023, we understand that our results have been quite positive and solid. We have been able to have a kind of a solid growth, with revenues above EUR 9 billion, which means an increase of around 18% year-on-year and with a very good outperformance. A growth which has been quite profitable, being able to generate an EBITDA of EUR 1,011 million, which means an increase compared with previous year of 19% and a very good, sound EBITDA margin, and also being able, at the same time, to generate a solid free cash flow of EUR 80 million and preserving our debt position with a leverage of 1.6 times net debt to EBITDA.
So a strong set of results, and clearly committed to meet all our 2023 targets. Moving to slide number 5, and to have a closer detail on year-to-date financials. The revenues up to September has been EUR 9,072 million, comparing with the EUR 7,700 million in the first nine months of 2022. So it means an organic growth of around 18%, which is quite solid. In terms of EBITDA, we have generated, as mentioned, EUR 1,011 million, compared with the EUR 847 million in the nine months of 2022, which makes an EBITDA margin of 11.1%, which is more than 11% in the nine months of 2022.
If we don't take into consideration the impact of raw materials, this EBITDA margin should have been around 12.3%. EBIT of EUR 507 million, compared with EUR 376 million in the previous year, which means an EBIT margin of 5.6%. Net income of EUR 225 million, EUR 42 million more than the previous year. CapEx of EUR 649 million, and with a net debt of EUR 2,235 million. If we focus in the Q3 financials, basically, the reported revenues of the company has been slightly below EUR 2.8 billion, which is 1% below reported basis to the one we generated in the Q3 2022. But if we take into consideration in a different impact in raw materials and FX, which would have been a positive organic growth.
EBITDA has been higher than the one generated in the Q3 2022, with EUR 311 million, compared with EUR 293 million. A margin of 11.1%, compared with 10.4% on a reported basis in 2022. EBIT of EUR 142 million, comparing with EUR 136 million the previous year, which means a 5.1% EBIT margin. Net income of EUR 63 million, which is EUR 3 million less than the net income of the Q3 2022, and a CapEx in this period of EUR 224 million. If we refer to the market in slide number 7, you will see the the number of light vehicle production up to September in our footprint.
It has reached close to 60 million, which means an increase compared with previous year of 9.4%, which is much more than what we and the market was expecting in the beginning of the year, as you can see here in this chart. It's also important to mention that this important growth is mainly due to a very relevant growth in the first half of the year and a lesser growth ratio in the Q3. Moving to the slide number 8. We have been able, and during this period, as mentioned before, to grow by more than 18% in organic growth, excluding raw materials, and that means an outperformance to the market of 8.9 percentage points.
We have been able to outperform the market, even though we need to take into consideration that the sales that we had in this period and the number of vehicles produced in this period has been much higher than the ones we expected in the beginning of the year. So that means that we have outperformed the market with higher sales than expected in the beginning. In terms of geographies, we have been able to clearly outperform in areas like Eastern Europe, Asia, and Mercosur, and we have been a little bit underperforming in areas like NAFTA due to our specific positioning in some of the plants of the European players, and in the case of Western Europe, due to the impact of the raw materials.
In any case, as mentioned in the slide number nine, we try to outline that we had in this period a quite solid organic growth. In fact, we had this EUR 9 billion, means that we have an organic growth of EUR 1,253 million, which is 18% growth. It's true that then we had the EUR 483 million coming from Gescrap , but we have a negative impact from Forex of EUR 384 million, mainly due to the first currency move in the areas of US, China, and also Turkey and Argentina. Moving to slide number ten.
I think this slide, we are trying to show that even if we are referring to nine months of 2023, the amount of vehicles that were manufactured during these nine months of the year, compared with the amount of vehicles manufactured in the nine months of 2019, is basically the same, around 60 million units. That was pre-COVID levels. But if we go to the right side of the slide, we'll see that with the same amount of vehicle manufacture, our group has been able to have a turnover of EUR 8.5 billion, which is an increase of 17%, if we exclude Gescrap, and we have been able to move our EBITDA from EUR 755 million to EUR 975 million, excluding also the Gescrap EBITDA.
So that means that we have been able to grow much more than the market, because the market in this period has not grown, but also we have been able to grow our EBITDA more than the market, because excluding raw materials, in the 9 months, 2019, we generated an EBITDA margin of 11.5%, and in this period, excluding Gescrap, we have generated 12.6% EBITDA margin. Moving to slide 11, we have been able also to generate a solid net income. As we have mentioned, we have focused a lot in the last years in trying to improve also our net income basis. This year we have increased our net income up to September from EUR 183 million to EUR 225 million.
So that means a 23% increase in net income, and we have been able to do that even if there is higher financial expenses, because we have been able to increase our EBITDA. We have been able to have our debt under control, and also because of the progressive approaches of different minority positions. And with this now, I hand it over to Ignacio Mosquera.
Thank you, Paco, and good afternoon to everyone. Moving on to slide number 13, we show in this slide the performance by region on a year-on-year basis. As you all know, our results remain impacted by the increase in raw material prices, which has amounted to EUR 871 million in revenues during the first nine months of the year, and roughly in line with the EUR 849 million seen in the same period of 2022. This is due to more activity offset with a lower price of raw materials. As you know, EBITDA is not impacted by raw materials due to our pass-through process. Looking at each region in detail, revenues in Western Europe have grown by almost 10% year-on-year in nine months, 2023, to almost EUR 3.5 billion. Performance in the region is negatively impacted by the raw materials.
Also, the region has lost some dynamism in Q3 due to tough comparable on a year-on-year basis. Some supply chain disruptions affecting some clients due to the flooding in Slovenia and revenue mix. In terms of EBITDA, it reached EUR 398 million, which represents a 28% increase year-on-year. As a result, EBITDA margin stood at 11.5% in the period, improving by more than 150 basis points year-on-year, even with the inflationary pressures and the raw materials impact. This performance reflects an improved operational leverage, reduction of raw materials pricing that is margin accretive, and some compensations from clients. As most of you well know, consolidating profitability improvement has been a key area of focus for us, as we explained during our CMD back in June.
In Eastern Europe, the performance in the period has been strong, proving again our solid positioning in the region. The reported performance in Eastern Europe during the period is distorted by the raw materials impact. During Q3, this region gained momentum, particularly driven by Turkey, Czech Republic, and Poland, as we were expecting. On a reported basis, during the first nine months of the year, revenues have grown by 16% year-on-year to EUR 1,256 million, while EBITDA has increased by almost 5% to EUR 177 million, with an EBITDA margin of 14.1%. Excluding raw materials impact, profitability would have increased year-on-year. In NAFTA, as it is well known by all of you, the performance of the region continues to be negatively impacted by our client and project mix, and limited profitability in some specific contracts.
Our revenues have grown by around 7% year-on-year, and EBITDA has remained broadly flat in the period, leading to an EBITDA margin of 7.5%. As explained during our last Capital Markets Day in June, we remain focused on turning around our market positioning and profitability in the region over the coming years. In Mercosur, despite the negative impact from raw materials, our solid market positioning has allowed us to grow by more than 12% year-on-year in the nine months. Excluding raw materials impact, we would have strongly outperformed the market. EBITDA in the period has increased by almost 6% to EUR 88 million, with EBITDA margin slightly deteriorating to 12.2%, mainly due to a higher impact from raw materials when compared to last year. As excluding it, we would be improving.
In Asia, our performance continues to benefit by our strategy to grow in EV with both international and local players in China. This market continues to be an opportunity for us. During the nine-month period, revenues in this region would have grown by 18%, driven by a strong market outperformance explained by our EV products. As a result, EBITDA grew by 18.4% in the period, with an EBITDA margin in the region of 13%, in line with 2022. However, excluding raw materials impact, profitability would have improved on a year-on-year basis.... Finally, Gescrap has contributed with EUR 483 million to our nine-month 2023 reported revenues, and EUR 36 million at EBITDA level, which implies a 7.5% margin. Gescrap's performance has been good, though marked by the decrease in raw materials pricing.
Overall, we have seen a solid performance in the period, driven by strong organic growth, despite the negative impact from FX and an EBITDA margin excluding raw materials at 12.3%. In fact, our organic business has already reached an EBITDA margin of 12.6%, excluding raw materials. This reflects the success of our strategy focused on profitable growth, as explained in our last Capital Markets Day. We are firmly committed on achieving our 12.5%-13% EBITDA margin target for the year, excluding raw materials, as guided at the beginning of the year. Turning to slide number 14, we see that CapEx has amounted to EUR 649 million, equal to 7.2% of reported revenues in the nine months of 2023.
In the period, recurrent CapEx stood at EUR 236 million, representing 2.6% of revenues. Growth CapEx amounted to EUR 331 million, or 3.6% of revenues, while intangible CapEx represented 0.9% of revenues in the nine months of 2023. As we have been indicating throughout the year, CapEx will be picking up in the second half of the year, in line with the project's execution plan. We expect to end of the year with a CapEx of around 7.5% of revenues for the year, as indicated in February. Turning to slide number 15, we see that we continue generating positive free cash flow. We have generated EUR 50 million of free cash flow, thanks to the solid EBITDA growth and the continued optimization of our working capital management.
As a result, during the first 9 months of the year, the company has generated a total free cash flow of EUR 80 million. This cash flow generation demonstrates that we're in the right path to reach our target of generating more than EUR 200 million of free cash flow in the year. As we move into slide number 16, we have ended September 2023 with a net debt of EUR 2.235 billion, which is EUR 90 million above the reported in December 2022, and EUR 11 million above the reported in Q2 2023, mainly as a result of the final dividend paid in July. As of September 2023, net debt implies a ratio of 1.6 times, which is the lowest since the IPO.
Gestamp continues to be fully committed to the deleverage of the company to meet the new target presented in the capital market space, of preserving a leverage ratio within the 1-1.5x EBITDA range up to 2027. In terms of liquidity, we ended September with a solid liquidity position of EUR 1.9 billion, which includes total cash balance of EUR 1.1 billion, as well as undrawn credit lines. Thank you, all. Now, I hand over the presentation to Paco for the outlook and closing remarks.
Thank you, Ignacio. Moving to the slide number 18. In terms of the market figures, in terms of the number of vehicles manufacturers are expected to manufacture in 2023, we see that now the latest forecast is reaching up to 88.6 million, which is a very substantial increase compared with 82.3, and around 3.6 million of vehicles more than expected in the beginning of the year. Mainly, this increase, compared with the forecast at the beginning of the year, is coming out from the increase in terms of production in Western Europe and also in Asia, and with a slight decrease compared with the forecast in the beginning of the year in US.
Also, I would like to highlight that the EV penetration in the overall market for 2023 is gonna be around 18%. Moving to the slide 19, around our guidance. I would like to remind you what has been the guidance from the beginning of the year from our side. In terms of revenues, we have guided for a high single-digit performance in terms of organic growth. We have also guided for an EBITDA margin, excluding raw materials, between 12.5%-13%. A CapEx around 7.5% of reported revenues, and a free cash flow of more than EUR 200 million. Right now, at this moment of time, I would say that we are fully committed to deliver on our targets for the year, as we are doing every quarter. Just some closing remarks.
I would like to say that we feel that these results that we are presenting for the nine months of 2023 are record results. Of course, record results in terms of growth, that we keep on outperforming the market, a growth which is profitable, and also preserving with a clear focus of preserving our sound financial position. We are, of course, in the right path to meet our short-term commitments, which are the guidance. We are committed in the long run to meet all the targets that we outlined in the Capital Markets Day we have some months ago, and of course, like always, very close in order to be able to support the needs of our customers. And with that, now we are, all of us, open to the questions.
Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press star five on your telephone keypad. Thank you. The first question comes from Alberto Espelosín from JB Capital. Please go ahead.
... Yeah, good morning, and thank you for taking my questions. I have two, if I might. My first one is on guidance. Top-line guidance seems more than reachable, but I'm a bit concerned on EBITDA margin guidance. So for you to achieve the lowest end of your EBITDA margin, you nearly say 13% margin in the Q4, are you able to reach this margin in the last quarter of the year? And why should we see this jump in EBITDA margins for the last quarter? And my second and last one is on factoring. Could you please provide the level of factoring at the end of the Q3 2023, please? Thank you.
So basically, I can take the first one, not sure. Of course, as I mentioned, we are committed to deliver on guidance and also in the EBITDA margin. As you have seen in our. We are already up to September, very close to the point of 12.5%. So that means that we have guided to have a margin of between 12.5%-13%, and as far as we see, our Q4 is always a strong quarter, so we feel right now comfortable to be able to meet this guidance between 12.5%-13%. And around the factoring matter? Yes, the factoring levels have remained broadly stable around EUR 670 million per quarter.
Understood. Thank you. So is the Q4, yeah, a thing of seasonality, or are there any other drivers? Or it should just be seasonal, seasonally higher?
Seasonality, yes, as I said, yes.
Okay. Thank you.
Thank you. The next question comes from Francisco Ruiz from Exane BNP. Please go ahead.
Hello, good afternoon. I have two questions. The first one is a follow-up on the previous one on the margins. Could you give us an idea, because we have seen a deterioration in the margin in this quarter isolated. Can you give us an idea what apart from the seasonality, what is driving the margin expansion in the Q4? I mean, price negotiations, change in mix, and what are your estimates on raw materials for Q4? And the second question is on the outperformance, because we have seen an underperformance in Q3 isolated. So could you explain this, and what's your expectations for Q4?
A follow-up on this one is, we have read this morning in a Spanish newspaper that there is a, I don't know, an implicit guidance of 12% growth in sales for this year. I don't know how suitable is this figure, or we should think on another one.
Okay, thanks for your questions. I think, concerning the first question around margins, I think, as mentioned, there is seasonality. Also, our Q3 is a little bit lower, especially in Europe, in terms of sales. So we usually our margin for the Q3 is a little bit lower, but if you compare with the margin we had in the Q3 2022, we have been able to do a little bit better. And for the Q4, we always have a little bit more on sales, so it's quite logical that we should be able to generate a margin which is a little bit higher than the average that we have in the year. So I think it's nothing strange.
It's a seasonality if we talk about that. If we think about underperformance in terms of outperformance in terms of sales, I think in the presentation we have tried to focus in the idea of what is what has been our organic growth. And it's true that when you see the reported basis, it seems that we have done some kind of underperformance, and especially if we think about the year to date. But it's true that if we think just considering the Q3, we have been impacted in some cases for the FX, which is coming from some specific regions, including China, but also areas like Turkey and Argentina. So this has been impacted for us.
But in terms of organic growth, without taking into consideration the FX, that is correct. And also, we need to take into consideration that the impact in raw materials is also, in this case, working against us. So just adding all of that, we have... We should have been an outperformance of around 4%. And I think if you refer to a kind of a message, because yesterday, I think as a company, we received a prize, and we were talking, and that was just a kind of very brief message from our side, stating that last year, our company was able, for the first time, to have sales of more than EUR 10 billion, and that this year, our sales were already going to be above EUR 12 billion.
I think, this is basically what we stated, and this is just a kind of, very, very non-exact wording or commitment.
Okay. Okay. It was as we seen. Thank you very much, Paco.
Thank you.
Thank you. The next question comes from Álvaro Lenze from Alantra Equities. Please go ahead.
Hi, thanks for taking my questions. I have a couple. Just wanted to know your views on the impact on the auto industry of Chinese EV players gaining market share, especially in Europe, and how would you see that as a potential threat or opportunity if whether China continues to increase its exports of electric vehicles into Europe or whether they-
... move and reallocate production and start producing the Chinese OEMs here in Europe, and how will that affect Gestamp? My second question is your view on the potential ramifications of the United Auto Workers strike in the US. I don't know to what extent your labor force in the US is unionized and whether you are seeing an increased pressures on the cost side beyond the direct impact that the stop of production could have had in Q4. Thank you.
Okay, thank you for your questions. I think, regarding these concerns around the sales of the Chinese EV players in Europe, I would say that first, in the last month, we had an increase of the sales of Chinese players, but not, let's say most of them have been in EV, in electrical vehicles. But in any case, what is important to mention is that, in the short run, we can talk about export. In the long run, if they decide that they could be able to do a good business in Europe, they will probably allocate themselves here.
I think, from this point of view, what is important from Gestamp positioning is that we are already a very relevant local player in China, working not only for international companies, but also for local players and especially for pure EV players. So we believe that whenever they decide to take a decision to, to build any plant outside of China, I think we can be a, a partner of choice in order to be able to go with them in Europe or, or in other countries. Referring to the, to the strikes of UAW, I can tell you that none of our plants are unionized, but it's true that, probably for next year, it's gonna be some kind of additional pressure in wages. And of course, this is something that we will need to, to negotiate to some extent with our customers.
Thank you.
Thank you.
Thank you. The next question comes from Christoph Laskawi from Deutsche Bank. Please go ahead.
Good evening, and thank you for taking my question. The first one, also somewhat BEV related, but slightly different question, I'm afraid. So we heard from other suppliers that the call offs in Europe and the U.S. for certain BEV lines are 30%-50% below plan. Now, you are supplying to several of those models as well. So just wondering if you are seeing a general weakness versus first indication of volumes in European and U.S. BEV models, and if you would see any impact on earnings. Judging from Q3, it should be very limited, and you are likely flexible. And in this regard, how flexible are you to change between the model lines, when there is one which is more successful and another one which is probably losing out?
And are there any costs associated to that? And then lastly, just any preliminary thoughts on the steel price impact into 2024? We've seen it being a bit more volatile, as of late. Should it be a headwind overall for 2024? If you can comment on that, that would be appreciated. Thank you.
Okay, thank you. Thank you very much. I would say that the sales of electric vehicles, basically in Europe during the last month, has been a little bit weaker than expected. And that has been impacting the general market and probably is linked to some kind of messages around subsidies and probably some concern for some customers. But from our point of view, this is something referring to the market itself and not specifically related to some problem of some specific OEMs. So I would say that we are quite flexible in when it refers to the dedicated assets. I mean, our process, of course, and our plants are able to manufacture different things. Of course, from one way to another, it's not easy because, as you know, we usually...
Whenever from the time we take a nomination, from the moment we start production, we clearly take some time. It's also true that some of our customers, we have important nomination, not only in EV, but in the previous combustion engine vehicles. So right now, in some cases, what is happening is that we keep on producing more in ICE and maybe a little bit less in the area of EV, but it's not a sort of dramatic issue for us. And I can't today give you an exact answer to what is gonna happen with the steel prices in 2024 for auto.
Right now, since the beginning of the year, there's been some more pressure to further reductions, but still it's not closed. It's not any final agreement for the year with the auto. But I would say that today we see a little bit more risk, let's say, to the prices to go down than up. So it's not any kind of headwind referring to the increase of any kind of increase in the steel prices.
Thank you very much.
Thank you. The next question comes from Akash Gupta from JP Morgan. Please go ahead.
Thank you. Akash from J.P. Morgan. Three from my side as well, please. The first one on the margin compression in Eastern Europe in Q3. I'm not totally sure I've understood all the reasons behind the lower margin in Eastern Europe, so if you could just shed some more details on that, that would be great. The second question is on labor inflation. As we now see labor inflation being much more sticky and persistent, specifically in Eastern Europe and North America, how do you plan to manage labor inflation going forward? And are the OEMs on a continuing basis willing to accept those higher costs of labor inflation? And the last one on CapEx. When you think about end markets, your order intake, and near-term stagnation in battery electric vehicles, how are you thinking about growth CapEx going into next year?
Any guide on those CapEx numbers will be great. Thank you.
Okay, thank you. So maybe I can take one, and you can take the other, Nacho. If we refer to the labor inflation and how this is impacting areas like Eastern Europe and North America, I would say that of course, in the case of Eastern Europe, we have already this inflation for many years, and we have been able to offset that, doing a very good job in terms of productivity. And this is something that is natural for us. I mean, the inflation in Eastern Europe countries, areas like Poland, Czech Republic, Slovakia, Hungary, we have seen already for many years, quite substantial increases in the wages. In the case of North America, also in the previous year, it has been already some important increase in wages, and now we have this specific impact coming out for the agreement with the UAW.
And of course, this is something that, we will need to negotiate with the OEMs, but it's also true that we need to do the part of our job like always, working and finding ways to increase our, our productivity, no? Maybe,
Yeah, on margin compression for Eastern Europe, as you point out, margin in Eastern Europe was 14.1% versus 15.6% in year 2022 for nine months, and that has been driven. Actually, in fact, it's the margin is accretive if you exclude the raw materials. So there isn't really a margin compression in itself, it's purely a mathematical effect of the raw material pass-through.
Yeah. About your question around the CapEx, we keep on working on the CapEx, and we still don't have figures for 2024. Of course, we do have some nominations, and we will see what is gonna be the impact. But, we will try to follow our customers to be able to invest whenever we have the nominations, like always. So I cannot provide to you right now any new guidance on CapEx for 2024.
Understood. Thank you.
Thank you. Ladies and gentlemen, just a reminder, if you wish to ask a question, please press star five on your telephone keypad. Thank you. Ladies and gentlemen, there are no further questions. Dear speakers, back to you.
Well, thanks very much for attending the call, and we will probably speak next year, so enjoy your holiday season that is coming soon. Thanks.
Okay. Thank you.
Thank you.
Thank you.