Good morning, ladies and gentlemen, thank you for joining our Q1 2023 trading update, which will be hosted by our CFO, José Núñez . José will give you some highlights of the period and walk you through the operational and financial performance of the group. Following the presentation, we will have the usual Q&A session. With this, let me hand things over to José .
Thanks, Maricel. Good morning, everyone. Thank you all for joining us this morning. Let's start by saying that 2023 begins with a strong operating visibility. As expected, a slow financial performance that will improve throughout the year, specifically during the second half to accomplish the guidance provided to the market at the end of February, which is, by the way, hereby confirmed. Revenues reached EUR 76.8 million. EBITDA stood at negative EUR 4.6 million, mainly driven by a low sales figure in Q1 2023, something already expected and shared by the company at the beginning of the year. Nonetheless, our operational figures give us good visibility and reflect the good evolution of the sector worldwide. As you can see in our industrial division, backlog stands at EUR 221 million on pipeline at EUR 10.9 billion.
Regarding the development division, we have 14.2 GW of projects under development in 8 countries in different stages of development. Looking at our recently created Soltec Assets business, we already have 230 MW under operation in Brazil and in Spain and 25 MW of capacity under construction also in Spain. In terms of sustainability, we are well renowned for our ESG performance. We've been ranked highly by different ESG rating agencies, Sustainalytics, MSCI, CSA, and EthiFinance. We have launched our ESG action plan based on five pillars: environment, talent, society, governance, and sustainable innovation. In addition, we're already recognized in the market by the way we develop our projects under the Ecovoltaics concept, by being fully committed to our communities, the environment, and of course, good governance.
It is not just about reaching our goals, we truly believe how we reach them makes the difference. Let's move now to slide eight to look at the operational indicators. In our industrial division, we supplied 300 MW of trackers during Q1 2023, which elevates our historical track record to 15.9 GW. The tracker market remains strong, and demand for trackers is expected to keep growing over fixed installations over the coming years, reaching 40% by 2025. Tracker systems are already predominant in countries where we have great exposure, such as Brazil, Spain, and the U.S. Our goal in our industrial business is not be the leaders in terms of market share, but to have good, stable margins in all our projects. Hence, we expect to maintain our traditional exposure to Latin America and Europe, markets in which our positioning is very strong.
As you know, in our industrial business, we define backlog as project signed, not yet fully completed, not yet fully executed. In other words, projects in which we still have some revenue recognition pending. While pipeline means potential future contracts where we do believe we have a certain chance of success. As you can see on the slides 9, 10, and 11, our backlog stands at EUR 221 million. 55% of our backlog is located in Latin America, 29% in the United States, and 16% in Europe. Regarding our pipeline, it stood at EUR 10.9 billion at the end of Q1 2023, reflecting the extraordinary growth of the demand for solar trackers worldwide with substantial growth opportunities in the most relevant markets.
The projects included in our pipeline are expected to be signed in the coming three years, and it's also worth mentioning that close to EUR 1.9 billion out of the total pipeline have a probability of success equal or higher than 50%. Moving now to slides 12, 13, and 14, our development division evolves also in a very positive way. We believe the public support of European institutions and the IRA in the United States, together with the ESG and decarbonization targets, will boost global growth of renewable energy. We have a pipeline of 14.2 GW at the end of March 2023 in 8 different countries in different stages of development, with 3.4 GW in the advanced stage and 2.5 GW in the early stage.
Brazil, with 6.6 GW, Italy with 2.9 GW, and Spain with 2.3 GW are still our most relevant markets. It's also worth mentioning that Soltec obtained environmental permits for 401 MW at the beginning of the year. Additionally, as of April 2023, we have also received administrative authorizations for two projects in Murcia, totaling 290 MW. Regarding Soltec Assets, as we can see on the slide 15, our goal is to reach a total capacity between 750 MW and 1 GW under construction and under operation at the end of 2025. As of March 2023, we had 230 MW of capacity under operation and 25 MW under construction.
In Brazil, we have already connected Araxá and Pedranópolis, while in Spain, we connected our first project in February 2022, La Asomada, a 5 MW project co-developed with Total, and we currently have another 25 MW under construction: La Isla, 4.5 MW, Los Valientes, 13.9 MW, and Totana IV, 5.5 MW. Let's move now to the next section of the presentation, the Q1 2023 financial results. On slide 19, you can see a quick summary of the Q1 2023 financial results for Soltec Power Holdings. As usual, we have focused on three key metrics: revenues, adjusted EBITDA, and net profit. Consolidated revenues reached EUR 76.8 million, EUR 21 million less than in Q1 2022 due to low tracker supply volumes.
Before we go any further, let me remind you that consolidated adjusted EBITDA does not only include the EBITDAs generated by our different businesses, but also the corporate expenses incurred by Soltec Power Holdings and the consolidation adjustments. Adjusted EBITDA at the end of the first 3 months of the year was negative EUR 4.6 million compared to EUR -13 million at the end of Q1 2023, which represents an EUR 8.5 million improvement, mainly due to the normalization of logistics worldwide. Finally, consolidated net profit was EUR -9.6 million at the end of Q1 2023, compared to EUR -15.5 million at the end of Q1 2022. On slide 20, we can see how revenues in our industrial division reached EUR 71.3 million.
Adjusted EBITDA for the industrial division was EUR -3.2 million at the end of the period, versus EUR -7.5 million at the end of Q1 2022, which represents a EUR 4.3 million improvement. The evolution of our industrial division in the first quarter of the year was mainly driven, as already explained, by low sales volume and the weight of the construction services provided by the company, which represented 54% of total revenues, versus 46% coming from our solar tracker supply. The demand for solar trackers will materialize in the second half of 2023, after all the IRA guidelines are released in the United States and the approved capacity in Spain reaches ready-to-build status.
Gross margins linked to the tracker supply business remained strong with double-digit positive margins on the back of more positive market conditions in terms of cost and high demand. It is important to stress that Q1 2023 EBITDA margins, mainly due to low activity levels and linear overhead expenses, are not expected to continue in 2023. On the next slide 21, we have the key financial metrics of our project development business. EBITDA is negative as we did not rotate projects in the first quarter. As we speak, we have M&A processes open in geographies such as Italy, Brazil, Spain, and Colombia, with a significant level of interest coming from well-known players in those market due to the high quality of assets under development.
In fact, today we're happy to announce a transaction in Colombia in which we have transferred 130 MW in early stage to Solarpack, and we also expect to release further information about some of the other processes in the coming weeks. On slide 22, we can see that revenues for Soltec Assets at the end of Q1 2023 reached EUR 3 million, while adjusted EBITDA was EUR +2.3 million. During the first quarter of the year, we have been able to raise up to EUR 100 million to fund the growth of the division. Right now, we already have 230 MW of capacity under operation in Brazil and Spain, and 25 MW under construction, also in Spain. More capacity is expected to be added to our asset management business in key markets in 2023.
Let's move now to slide 24 to quickly review the company's outlook for 2023. As we explained at the end of February 2023, this outlook is based on the demand we foresee for our industrial products, the decreasing impact of supply chain disruptions due to the measures we have undertaken, the asset rotation we expect to have in Soltec Development, and the energy sales coming from our asset management business. We expect Soltec Industrial revenues to be between EUR 600 million-EUR 700 million, while its EBITDA margin will be between 6%-7% for the entire year. Demand will mostly materialize in the second half of 2023 after the full release of the IRA guidelines, as well as the recently approved capacity in Spain reaches ready-to-build status. Therefore, we definitely expect greater seasonality of revenues than in 2022.
Regarding our project development division, Soltec Development, we expect EBITDA to be between EUR 25 million and EUR 35 million. Soltec Asset Management's sales will be between EUR 12 million and EUR 17 million, while its EBITDA margin will be between 70% and 75%. Finally, for Soltec Power Holdings, we expect its consolidated EBITDA to be between EUR 45 million and EUR 60 million. Before we move to the Q&A section, please let me quickly summarize a few closing remarks. Q1 2023 shows a slow start to the year while demand is stronger than ever. Based on industry trends and the regional evolution of the different regulations, we expect the Industrial division to experience high demand levels, which will clearly materialize in the second half of 2023 and during 2024. We already have capacity under operation, as you can see in our Asset Management business, and we expect to add more capacity during the year.
We have just closed the sale of 130 MW in Colombia to Solarpack. We have ongoing M&A processes in different geographies. We expect to release more information about them very soon. The sector remains strong. Our visibility is good for 2023. We are on track to meet our commitments. Therefore, to wrap things up, I would like to stress that we confirm our guidance for the year. Thank you very much. Let's move now to Q&A. Maricel.
Okay. Thank you very much, José . We can now move to the Q&A session. We've got the first questions coming from I gnacio Doménech from JB Capital. First one, Soltec Industrial. What has driven weak sales of trackers in the quarter? Should we see high single-digit EBITDA margins in the remaining quarters?
Okay. Thanks, Ignacio. Good morning. Well, essentially, as we explained during this presentation, and it was also mentioned, when we released the full year 2022 results, when we provided the guidance for this year, for 2023, we were very clear that seasonality is to be expected in this particular year. Essentially what's happening in Q1 2023 is something that we already expected, nothing that was a surprise to us, and in fact, something that we already shared to the market, in that particular presentation, at the end of February.
I would say that, as we mentioned also, the IRA in the United States plus the fact that the majority of the capacity that has been approved here in Spain at the beginning of the year, obtained environmental approvals at the beginning of the year, is obviously going to be a significant and relevant element in terms of these generating this seasonality in 2023. As mentioned, it was something expected and nothing to be surprised about.
Okay. Another question for the development business. On the 130 MW of asset rotation deal in Colombia announced, can you confirm the selling price per megawatt?
Essentially, this transaction has not been fully completed, so we cannot disclose all the details about it. It will be reflected, that's what I can tell you at this point, Ignacio, in the Q2 results that will be released later in the year. But I can tell you that in addition to this particular process, M&A process, we also have, as explained during the presentation, additional process ongoing in different geographies, Spain, Italy, Brazil and Colombia as well. We will be releasing additional information about them in the coming weeks.
There was another question regarding the debt. Can you give us some color on financial costs in the first quarter? Net debt should be broadly in line with full year 2022 figure.
It is, in fact. I mean, if you remember, Ignacio, we basically stated back in February that we expect the net financial debt to be between EUR 250 million-EUR 160 million at the end of 2023, okay? At the end of March, the figure is around EUR 163 million. We're clearly in line with what we expected. In terms of financial cost, this is something that we also disclosed back in February. Essentially, we do have basically three different kinds of financial facilities. We have the syndicated facility for Soltec Industrial to finance, as you know, working capital needs.
For that particular financing facility, we have basically Euribor one month plus 2.5%, although we do have a small bonus if we manage to achieve some ESG targets that will reduce the 2.5% spread to 2.475%. Then we have essentially right now at the end of March, the BNDES facility that is helping us complete the construction of Araxá and Pedranópolis in Brazil. For that particular facility, we have basically inflation plus 4.37% in the case of Araxá and 4.29% in the case of Pedra. Inflation, it's also part of the adjustments we received in the PPA price that we have for those two contracts. Therefore, we can say that essentially we are hedged against inflation.
We're basically paying 4.37% for Araxá and 4.29% for Pedra fixed. We have the latest addition to our portfolio, the Incus facility. We have already basically done a couple of disposals. Essentially interest rate charts on this particular facility that we'll be paying for this particular facility, as we explained, is between 5.5% and 6% annually.
We've got another set of questions from Tomás Muniesa from CaixaBank. Can you explain the strong evolution of the pipeline from the industrial division?
Okay. Thanks, Tomás. Good morning. Essentially, as we explained also during the presentation, it's linked to the strong demand for products and most specifically for Spain and the United States. Those two markets are clearly experiencing a significant growth. I mean, the United States is well-recognized as being the largest market worldwide in any case, but it's been experiencing even higher growth than in previous years. In the case of Spain, as you are very well aware, I mean, there's a significant amount of capacity, basically reaching ready-to-build status during 2023, and we have incorporated all those projects in our pipeline in the first quarter of the year.
There is another question. Have EBITDA margins of the industrial division been improving already in April, May? When are we going to see positive margins again?
Essentially, let me start talking about gross margins. Gross margins for our industrial business, and I'm focusing here on Tracker Supply, have been performing really strong. I mean, they're, I would say, higher than ever. The only problem in the Q1 2023 period has been the fact that, as explained, the volume of sales has not been very high. It's a temporary situation. As we stressed during the presentation, our guidance hasn't changed. It's confirmed. Definitely the situation is gonna change throughout the year. We're already seeing basically that it's already changing. We do not expect to see the margins we saw at the beginning of the year in coming quarters.
We've got another question from Amalis. Regarding your industrial pipeline, by what amount do they usually grow per quarter? Another one: By now, do you have visibility over your supply chain for the coming quarters?
Okay. Good morning, Mohanti. Well, regarding the pipeline, there is no fixed amount by which our pipeline increases on a quarter basis. It depends on the demand for our product worldwide. As I explained before in the previous question coming from Tomá s, essentially, we've had a huge increase in Q1 2023, linked mostly to the extraordinary demand that we're seeing for our products worldwide, but more specifically to Spain and the US, okay? In addition, regarding our supply chain, really, we are clearly seeing, and we saw that last year, and we explained that in previous presentations, a clear ease of the constraints and restrictions we saw in previous years in 2020 and 2021 regarding our supply chain. Situation right now is much favorable.
Therefore, we're not experiencing the difficulties we saw in those two years, 2021 and 2020.
There are questions from Virginia Santamaría from Santander. First one, how many megawatts do you expect to deliver in Soltec Industrial this year?
In terms of tracker supply, Virginia, good morning, it's gonna be between 4 and 4.5. That will take us to the sales figure that we provided in our guidance between EUR 600 million and EUR 700 million.
How much do you expect construction services to represent out of the full revenues of the industrial division by 2023?
Okay. Out of the range I just mentioned, EUR 600 million-EUR 700 million in terms of revenues at the end of 2023, about 65% will be linked to tracker supply and 35% roughly is gonna be linked to construction services.
There is another question regarding ASPs. How do you expect ASP to evolve in 2023? I believe in the tracker business.
Okay. ASPs, as we mentioned also at the end of February, have remained relatively stable over time. As we also explained, we do believe sooner or later we're gonna see some adjustments. We'll see, we believe, some in 2023, they will continue in 2024, 2025, recovering the trend that we saw pre-COVID of, basically, reductions in the ASP over time.
Regarding the development division, in the development M&A market, do you see appetite for your pipeline in this world of rising interest rates?
Yeah, there is a lot of interest. There is still a lot of interest. You have to keep in mind that despite the fact that interest rates are on the rise, and that's something undeniable, CapEx has been getting better over time. At the end of the day, it's not just one variable that you need to look at when you're developing or selling projects in order to assess the profitability of a given project. You have to look at several different variables. Though it's true that interest rates, as you mentioned, are on the rise, and that's as I mentioned before, it's undeniable, there are other variables such as CapEx that it's basically getting to a downward trend. That's basically easing the burden imposed by interest rates.
We have more questions coming from Luis De Toledo from ODDO. Does the increase in the pipeline in new regions such as India, Saudi Arabia, South Africa threaten double-digit growth?
We don't think so, really. In terms of if you're talking about gross margins, basically the gross margins we're currently achieving on tracker supply, we do not see a threat coming from increasing our pipeline in, as you mentioned, new regions, Luis. Quite the opposite, we believe. The more opportunities are open for everyone, and there is no really, in our view, relationship between profitability and the fact that pipeline increases.
Which is the EBITDA impact of the rotation that you announced in Colombia?
As I mentioned before to the question, sent by Ignacio from JB Capital, we cannot disclose that information yet, but we will provide you more details when we release the Q2 2023 results, the H1 at the end of the day 2023 results.
Question from Virginia from Santander. What do you expect as possible orders from the US after IRA is implemented?
Well, we do see different impacts. Obviously, on the industrial side of the business, definitely we see an significant increase in the order book. Therefore, our backlog should see a change in the different relative weights that we're currently achieving in terms of market diversification. Definitely, there's gonna be, in our view, an increase first in our pipeline as it has already been experienced. Then in our backlog as those contracts get signed, and then finally in our revenues as those contracts that are signed get executed.
There is another question from Eduardo Imedio from Renta 4. What is the situation with the 488 MW in the backlog in Brazil? Will they be built or are they going to be sold?
They'll be sold. I mean, we do not expect to transfer any additional Latin American assets to Soltec Asset Management. Essentially after the two transfers that have already taken place, the two projects are in operation right now in Brazil, Araxá and Pedranópolis, 225 MW in total. We do not expect to add additional capacity in Latin America. Any additions to our Soltec Asset Management portfolio will be coming from Europe, basically Spain or Italy. Okay? The portfolio that we currently have in Brazil is expected to be sold.
Okay, we have no more questions on the platform right now. Thank you very much. With this, we conclude the Q12023 trading statement. Thank you very much.