Good morning, and welcome to Gafisa's fourth quarter 2023 earnings call. This video conference is being recorded and will be made available on the company's investor relations website at ri.gafisa.com.br where you can also find all of our earnings materials. Those listening to the call in English can mute the original audio in Portuguese by clicking Mute Original Audio. Before we start, we would like to inform you that management statements involve risks, uncertainties, and may refer to future events. Any changes in macroeconomic policies or legislation and other operating results may affect the company's performance. This presentation will be conducted by Sheyla Resende, CEO, Luis Fernando Ortiz, VP of Business, and Aldo Di Leta, Executive Director of Legal and Investor Relations. I will turn the conference over to Ms. Resende. Please, Ms. Resende, you can proceed.
Good morning and welcome to Gafisa's fourth quarter 2023 earnings call.
2023 was a challenging year for the real estate market, heavily pressured by high interest rates and low growth, which caused most players to adopt more conservative strategies. In the face of such economic context, Gafisa maintained its plan, directing its effort to reducing medium and medium-high income inventory and completing the construction works that have been planned. We focused primarily on reducing expenses, and at the end of 2023, we had already posted a 12% year-on-year reduction. The measures adopted in this reduction will also lead to a decrease in 2024. Following our 2023 plan, we adjusted our portfolio throughout the year, divesting from projects that were not in line with our business plan.
In this context, the company chose not to launch products in 2023, since some of our projects benefited from the review and changes to the strategic master plan and the land use law in the city of São Paulo, which will provide a significant improvement in financial indicators. We finished the year with excellent operating performance. Gross inventory sales totaled BRL 970 million, a 21% increase year-on-year. Of this total, 72% are under construction and 28% are finished units. Such figures led us to a net revenue of BRL 1.1 billion, despite not having launched any projects in 2023. Another indicator worth mentioning was the year-on-year reduction in cancellations. 20% of the total cancellations was reversed in upgrades of units in the same project or in other projects. As a result, we ended the year with an adjusted net profit of BRL 48 million in the fourth quarter.
The net loss accumulated throughout the year reflects the persistent high interest rates and cost inflation, especially in projects developed during the pandemic. Sticking to our plan of selling non-strategic assets and postponing launches also impacted our result. This year, in which Gafisa celebrates its 70th anniversary, a milestone in our history, the company will keep its position as one of the main brands in the real estate market. As proof of our benchmark position, the company was recognized eight times in 2023, receiving three significant certifications and winning six awards. This totals 97 awards over the years. Looking forward to 2024, we will maintain our high-end segment position. The company was recognized eight times in 2023, receiving three important certifications and winning six awards. This totals 97 awards over the years.
Looking forward to 2024, we will maintain our high-end segment position, which will allow us to access new business model opportunities, diversifying the sales model with a strong focus on increasing revenue. We will continue with the objective of reducing expenses and other measures aimed at reducing leverage. We appreciate the trust of our shareholders, strategic partners, and employees. I wish you all a great day. Now I'll turn the conference over to our Business VP, Luis Fernando Ortiz.
Thank you, Sheyla, and good morning, everybody. Starting with slide six, in the year-on-year sales chart, we can see a drop in total revenue by 14%. On the other hand, considering that we had no launches in 2023, the inventory sales performance was 21% higher year-on-year.
With the new tactical plan in the sales and marketing areas, we were able to achieve an increase in sales volume with a proportional reduction in selling expenses. On slide seven, we highlight our consistency in sales performance over the years and reinforce that in 2023, we maintained a level that was in line with 2022, with BRL 970 million in gross sales in the year. One of the main highlights in 2023 was those sales of residential inventory in the city of São Paulo, in which we had an average VSO of 59% above the market average in a year that was challenging due to the economic environment. On slide eight, we highlight the evolution of our inventory, which in 2022 was BRL 2.5 billion, 83% in high and mid-high income units, and 17% in mid-income.
In 2023, on the other hand, in addition to the 42% year-on-year reduction, our inventory mix was 91% in high and mid-high income and 9% in the mid-income segment, demonstrating our oppression strategy of concentrating our portfolio in the high income segment. On the next slide, you can see the deliveries in 2023 with the six projects completed, totaling a PSV of BRL 559 million in 238 units. The average percentage sold in these projects was 95% at the end of 2023. The projects delivered were Stratos in the neighborhood of Itaim, São Paulo, Parque Ecoville in Curitiba, Ivo in Botafogo, Rio de Janeiro, Shape Perdizes in the neighborhood of Perdizes, São Paulo, Egara in Leblon, Rio de Janeiro, and Forma Leblon in Leblon, Rio de Janeiro. Now let's take a look at our financial performance.
The chart shows the consolidated net revenue over the last five years, in which we can see an evolution since 2019, demonstrating our continuous growth and the success of our strategies. I also highlight the 21% CAGR from 2019 to 2023, which bears witness to the company's operational consistency, even in the face of a challenging economic context, as mentioned by Sheyla in the beginning of the presentation. On slide 12, you can see our SG&A expenses over the last few years. In 2023, sales general and administrative expenses totaled BRL 153 million, a 12% reduction year-on-year, which demonstrates our commitment and the improvement of our operational efficiency, developing new strategies to ensure long-term financial sustainability. On slide 13, we highlight the 12% year-on-year debt reduction. As part of the plan, we will continue to focus on reducing leverage.
It is important to highlight that 95% of the total debt refers to projects that are in progress and on schedule. On slide 14, you can see the evolution of payment collection compared to revenue over the years. In 2023, this indicator reached 42% of payments collected over the total revenue of BRL 970 million, highlighting the quality of sales made in the period. At the end of 2023, total receivables came to BRL 1.3 billion. Finally, we highlight the benefit we obtained from the changes to São Paulo's strategic master plan and land use law. These changes increased the construction potential of our land bank, especially in two projects in which we obtained an increase of more than 50% in estimated PSV, making these assets even more valuable for the company. Gafisa remains committed to ESG initiatives.
The main achievements in 2023 on this front were the ISE and CDP Climate Certifications, the first-place award in corporate governance by Época Negócios 360°, and the Great Place to Work award. The company reiterates its commitment to good practices with continuous improvement, transparency, and collaboration across all stakeholders to drive significant and lasting changes in building an even more sustainable future. We remain confident and focused on executing the strategy adopted in recent years, consolidating our position in the luxury market. Thank you for your time, and now we are available to take your questions.
Thank you, Mr. Ortiz. We will now begin the Q&A session. To ask questions, please click the Q&A icon at the bottom of your screen and submit your question to enter the queue. Please stand by while we collect your questions. The first question comes from Alex.
What is the impact of previous vintages on Gafisa's results? We can see that there are still some units remaining from the previous quarter.
Alex, thank you very much for your question. In 2023, there was a very good performance in the sales of inventory. We had a 21% increase year-on-year, and that is even more significant if we consider that we did not launch any projects in the year, which usually brings inventory sales up. I think that this was the result of a good strategy in marketing and sales and also a good conversion in Gafisa products, which generated gains in São Paulo. We had extraordinary performance in residential with 59% VSO in 2023. Now in 2024, our inventory turn is very similar to what it was in 2023. The macroeconomic environment should be more interesting this year.
Therefore, we believe that our performance will also be very good in terms of selling inventory.
Thank you, Ortiz. The next question comes from Rafael Onofrio. Do you have any comments about cash generation for 2024?
We have eight projects to be delivered in 2024. In all of them, we have very good sales performance. We are at an average of 90% of the units sold, which gives us good predictability in terms of receivables in 2024.
Thank you, Sheyla. The next question comes from Rodrigo Andrade. You had no launches in 2023. Is that a result of a conservative approach due to the review of the city's master plan? What are the benefits of those changes, and what can the market expect for 2024?
Thank you for your question.
Indeed, there was a change in the city's master plan, and those changes yielded benefits for our land bank. That led to an increase in our PSV in more than 50% in some cases. We decided not to launch any products so that we could absorb those gains. Therefore, the new launches will have those benefits included in them. The idea was not to launch any products in 2023. On the flip side, we are going to yield benefits from these changes in our land bank. I am sure other players did the same. They are going to use those benefits in the coming projects.
Thank you, Ortiz. The fourth question comes from Andrea Dantas. Gafisa has consistently published its ESG initiatives. I would like to know which of them demonstrate their commitment, and also, what is the impact of those initiatives for investors.
Thank you for your question. Good morning. Gafisa brings together the tradition, since it is a company that is celebrating its 70th anniversary this year, and also good ESG practices, as we have been disclosing for a few years now. I am going to give you a few highlights. For example, when it comes to sustainability, Gafisa is renewing its ISE B3 certification. It had this certification for two years. We also have the CDP Climate certification. We also renewed our Great Place to Work award. When it comes to governance, we won the Época Negócios 360° Award in 2023 in the corporate governance category. That bears witness to our alignment with the society's interest, and also it shows that we are contributing to a good business environment.
Thank you very much. Please stand by as we collect more questions.
As there are no more questions, we conclude Gafisa's 4Q 2023 earnings call. Thank you very much.