Good afternoon, and welcome to our third quarter 2022 webcast. This webcast will focus on our third quarter and year-to-date performance, and we will share with you the highlights and management's observations. Let us look at some of the highlights of the third quarter. Q3 showed a strong 19% growth and turned a traditionally low quarter into the best quarter ever for AO. We had expected high growth, but the growth came in higher than anticipated, which continued in October. Based on this, on October 24th, we announced increased expectations to full year revenues. B2B had a strong quarter and came in with 23% growth. EA accounted for 6% of the growth, so the organic growth of 18% came from all B2B product lines and exceeded our expectations. EBITDA margin increased to 9.2%, fueled by the higher revenues and higher gross margins.
EBT came in at DKK 91.6 million , which is up 18% from last year, ending at a 6.9% EBT margin. Our warehouse expansion has been finalized, securing us a double capacity. AO won the international awards in September for European User Experience of the Year and Best Mobile Experience Of The Year. Those awards related to the AO365 app, which allows AO customers to do their trading 24/7 in our shops outside normal opening hours. With this opportunity, our shop is our customer's shop, and our inventory is our customer's inventory. Now, let us look at some of the management's observations. Fulfilling our customers' orders during time with uncertainties of supplies causes us to maintain higher level of inventories.
In some areas where the situation has gradually normalized, we have been able to destock with approximately DKK 50 million. At the same time, we have taken the opportunities given by increased inventory capacity, starting to stock new assortments. Global eCommerce has decreased more than we expected in 2022. In AO, we are getting close to the 2021 levels with a sales index of 94 in Q3. Sales index in the third quarter was 84 compared to 67 index in the first quarter. We see significant growth compared to 2020, and our ambition for B2C remains high. Cost inflation and increases in interest rates have historically proven to be indicators of lower consumer demands. Although seeing a high level of activity as we speak, it is likely that this will have an impact.
On the other hand, green transition and new activities such as EA and AO will offer growth opportunities. We see an increased number of bankruptcies within the construction industry. AO has taken out credit insurance on large customers, and we have provisions in place for the risk we see. EA Værktøj has been merged with AO, and the migration to AO's digital platform will be completed this coming weekend. The migration will provide a range of synergies for both the customers and AO, as we will be able to offer the carpenters the same high level of service as we offer today to plumbers, electricians, and building contractors. The shared eCommerce platform creates seamless shopping experience across both digital shopping and our increased presence in physical stores. EA's product range is now stored in AO central warehouse, and the fulfillment will be done by AO's existing logistics services.
All EA customers will have an AO account and access to the full AO product range, just as EA product range will be available to AO's existing customers through their existing accounts. We look forward to serve carpenters across Denmark, which going forward our shared platform will enable. It is indeed unpredictable times. While we do not know what exactly to prepare, to be prepared for, we do know that being agile and prepared has never been more important. In AO, we do feel prepared for unpredictable times. We have increased the physical store presence significantly during 2022, and our everyday customer interaction remain a cornerstone in AO's target to deliver an exceptional customer service. As mentioned earlier, by the acquisition of EA, AO also acquired the opportunity to serve a new line of business, namely the carpenters.
EA Værktøj, an increased inventory capacity, has enabled AO to increase our ready-to-order assortment from 400,000 SKUs to almost 600,000 SKUs this year. The demand for climate-friendly products is expected to increase further as a part of the green transition, which is expected to create higher sales. Furthermore, the significant upscaling of our outdoor warehouse facilities in Horsens will enable us to expand activities within water supply and green transition. Last but not least, we may not know what the future holds, but we do know what we hope for the future, our dedicated team of customer-focused employees. Summing up, we do indeed believe that AO is in a good position to embrace the unpredictable future, and it is equally important to be financially prepared for unpredictable times. Please take us through our financial readiness, Per.
Thanks, Niels. In AO, it is a strategic target to have a solvency ratio of above 40%. As you see from the table left, we went below for one quarter due to the acquisition of EA, but in Q3, we are back above 40%. Financial leverage has decreased significantly during the past year. It increased when buying EA and investing heavily in warehouse expansions and is 1.6% of EBITDA as we speak. We have converted bank debt to mortgage loans during the summer, which means that the majority of our net interest bank debt consists of mortgage and debt related to operating lease. The average interest rate related to mortgage is 0.62%. We have sufficient headroom in banks to handle daily business and finance inorganic growth as well. We own our central warehouses and logistics center and approximately half the outlets.
We try to operate in a scalable business model, allowing us to remove costs associated to activity if needed. For instance, 25% of all personnel in supply chain are temps. Clear capital allocation guidelines and a solid capital base allow for attractive shareholder allocations. Summing up, also from a financial point of view, we feel prepared for unpredictable times. Now, let's turn to the financials. We saw, as Niels said, a strong growth in Q3. B2B grew 33% including EA, and 18% excluding EA. The volume growth in B2B was slightly below 10%, and the rest being price increases. Satisfied to see that B2C is close to 2021 level. As Niels said, sales index in Q3 was 94 compared to 83 in second quarter and 67 in Q1. Bear in mind that we had a very strong B2C sales during COVID-19 in 2021.
EBITDA increased from DKK 100 million last year to DKK 122 million in Q3 this year. Financial costs took a hit end of Q3 due to the depreciation of the Swedish exchange rate and ended at DKK -2 million. EBT ended at DKK 91.6 million against DKK 77.5 million last year. The margin came in at 6.9% against 7% last year, and reason for the marginal reduction being the exchange rate adjustment. Let's turn to the margin development comparing Q3 to Q3 last year. The quarter saw relatively high margin development from 22.7% to 23.5%. We are satisfied to conclude that the higher margin business in EA already show up on the radar and is lifting the group margins by 0.4 percentage points in Q3.
The higher margin B2C business was relatively smaller compared to Q3 last year, which reduces margins by 0.2 percentage points. Lower price increases or more moderate price increases during this quarter took the positive one-off impact in Q3 down to 0.1%. Distribution costs took advantage of the lower B2C share and took advantage of the fact that part of the growth was price related. Distribution ratio improved margins by 0.5%. Now let's leave the margins and turn to the cost of doing business. As you know, we define the cost of doing business as the sum of salaries and external costs as a ratio of revenues. In other terms, the cost of doing business ratio is the difference between the gross margin and the EBITDA margin.
The cost of doing business amounted to 14.3% against 13.7% in Q3 last year. The increase of 0.6% is mainly due to the fact that EA brings another P&L structure with higher margins but also higher cost of doing business. This results in a cost ratio increase of 0.4% in Q3. Increased energy cost amounted to DKK 4 million more in Q3, equivalent to 0.3 percentage point increase. The tight management of the cost of doing business ratio is an important part of AO's ambition to reach 10% in EBITDA ratio. Let's leave cost of doing business and turn to the segment info which you will find at page 17 in the interim report. The B2B segment accounted for 89% of revenues and the B2C segment accounted for 11% of revenues.
The segment split was 86%-14% in Q3 last year. B2C sales increased 23% and B2B EBITDA increased 25.6% in Q3. The B2B EBITDA amounted to DKK 162 million compared to DKK 129 million last year. The B2B segment EBITDA margin amounted to 13.7%. The B2C sales was 6% shy of Q3 2021. However, a strong margin resulted in same earnings in B2C compared to last year. If we look at the indirect, the non-allocated cost, it has increased 32%. Roughly one third of the increase is due to the increased energy cost, another third to EA, and the last third due to increases in AO. Let's turn to the investments, and please be aware that in this table the chart does not include M&A investments.
The green band in the graph or in the table shows the normal level of maintenance investment in AO. As you know, AO has invested heavily in expanding warehouses in Albertslund and Horsens during the past 18 months in order to prepare for the future. Q3 saw normal investment level with DKK 21 million. Let's turn to cash flow and net interest bank debt. From a seasonal point of view, net interest bank debt is normally higher end of Q3 than end of Q4. During Q3, net debt increased DKK 30 million during the quarter, despite of increased earnings. The increase is mainly due to increased tied-up capital in inventories and accounts receivables. The latter also reflecting that September is a high sales month. Furthermore, Q3 saw a relatively lower part of sales related to the non-credit B2C customers. We saw a unchanged level of inventories in Q3.
We were able to de-stock in areas where situation has normalized, and the increase reflects AO increasing new assortment, as Niels said. Investments were normalized in Q3, as I said, following 18 months of significant investment programs. Now let's leave the financials and turn to the outlook 2022. As you are probably aware and that Niels said, we announced Monday this week that outlook for revenues and earnings for the full year 2022 was increased. Summing up. The new outlook is revenue of DKK 5.3 billion-DKK 5.4 billion, equivalent to a 10%-12.5% growth.
EBITDA in the range of DKK 480 million-DKK 495 million, equivalent to an EBITDA margin of 8.9%-9.3%, and an EBT in the range of DKK 365 million-DKK 380 million, equivalent to an EBT margin of 6.8%-7.2%. This concludes the Q3 presentation, and we are ready to take your questions. We have already received questions from you guys. We have one question related to the split of renovation and new building revenue. I think as we have said also at prior webcasts, we see around 30% being allocated to projects and 70% to renovation. How do we expect this segment to perform in a potential economic downturn?
Well, as Niels also said, in a recession or economic downturn, it's probably likely that the projects and new build will reduce. Historically, one will see that renovation is more robust when it comes to reacting to economic downturns. One would expect those to react less. How much of the gross margin is impacted by inflating selling prices compared to when you bought the inventory? Well, this is approximately 1 percentage point. We have another question related to the EA shops. Are they going to be upgraded to AO365 concept? Yes, they are. Out of the additional 200,000 SKUs you have added, how much of this is EA and how much is green transition?
Well, I don't have the precise numbers, but we have included the entire, or almost the entire EA assortment. We have also expanded when it comes to green transition products. I don't have the precise numbers. We have another question. If we expect that the coming year's growth is primarily from existing or new customers? We see significant potential for existing customers, as we said, in the very first webcast this year. I recommend to revisit that webcast. We do see a potential from existing customers, but as Niels also said, we are eager to welcome the carpenters and a new business line to AO, and that will also provide growth opportunity.
We have a question if we have any plans to increase exposure in solar energy. Yes, we are paying attention to solar energy as well as other green energy systems. We have a question saying that we own material part of our properties, and how does that give us an advantage in an inflationary environment as rents go up? It's a good question. I think the answer is that we don't own our own properties purely for financial reasons. We feel good about owning properties and our supply chain warehouses and know that we have full control for now and eternity for those properties. For 2023, can we expect CapEx in line with maintenance CapEx level?
It's a bit too early to say, but one should probably expect that us taking advantage of the EA synergies, that we will have some investments in adding space in those particular shops, AO shops. So you will probably see an investment level in 2023 slightly higher than a maintenance CapEx level, but significantly lower than the past years. Which products will be stored outside in Horsens? Well, basically the products for water supply, that will be a large part of it related to water supply. We have high expectations for water supply going forward, and we have a good business within water supply, both in Denmark and in Sweden. What cost synergies are you expecting from the EA takeover?
Well, we are calculating as we speak, and we will get back to that when we have taken the decisions. We have another question if we will expand the number of showrooms with the name Bo Bedre Bedst. We have one in Albertslund, that's right, and I hope you have visited or you will. It's a very nice showroom. We believe that it will be the future of B2C that one can also look and feel the product when you talk about bigger investments. If the customers agree with our take, then why not expand to more showrooms? We have a question relating to the development in 2023.
We fully understand the question, and it's also relevant. For the time being, our view related to 2023 are included in the slides and for now we have nothing more to add. How will new products of EA broaden the growth potentials for the whole A&O Group? Well, for sure we expect that many of the traditional AO customers will fancy the EA assortment. Cross-selling will hopefully be a good driver. EA has a broad and deep assortment, not only to carpenters, but in working clothes and in security equipment, et cetera.
They have a very strong assortment, and we are looking forward to be able to give our traditional customers in AO the chance to buy those parts of the assortment. What level of visibility do you have for B2B in terms of sales? Well, obviously we are during our physical shop outlets, we are in close contact with customers. That is one of our cornerstones in AO. We have many thousands customer interactions per day, so we feel pretty close to the customers and know what they how they feel about 2023. You know, as I do, that things they change rather fast, and the analysis we read today could be another one Monday.
For now, we think it's more uncertain to have a long-term guess than what it used to be. What is the logistics capacity in AO after the new warehouse expansion? And how much of the logistics cost is fixed? Well, the capacity is roughly said it's doubled, and that goes both for outdoor areas and for the automated system. As I said in the presentation, 25% of our personnel are temps. They fluctuate quite fast with the change, the level of activity. I would say that a bit more than half of the logistics cost, perhaps 60% is fixed cost. What are we expecting in terms of salary inflation?
Well, it's a good question, still being debated, I think, in many countries. I think on one hand, one could say that due to the inflation, the salary should be slightly higher than what it used to be. On the other hand, many corporations will look into a uncertain and tough year, 2023, which will have a reducing impact on salary inflation, in my mind. We have a question if you can tell a little bit about the actions done in order to keep EA's customers in AO. We acquired EA because they have a very strong culture regarding customer service. We feel in AO we have a very strong culture regarding customer service as well.
We are pretty alike in thinking that the customer is king and that we should walk an extra mile for customers. I would expect and hope that EA's customers would recognize and like the philosophy we also have in AO. How would you say that you are prepared today to handle the cost base in a recession? I hope that we answered that during the presentation. I have nothing more to add. Obviously we will look at a responsible management will probably have a plan that if activity does not meet your expectations, then you need to look to make your cost base reflecting new activity levels.
That also answers the next question, if we can reduce cost if activity goes down. Yes. Yes, we can. Should we expect you to expand the SKUs? How much more organically? Well, for now, as Niels said, we have expanded almost 50%. So for the coming time, it's more about analyzing the data and viewing how popular the new SKUs are, because in order for the new SKUs to fill up a location in the central warehouse, we need traffic. So, I think for the coming periods of time, we will look and learn, and obviously we are not ready to expand assortment.
Basically we want to have what the customers need. Are you investing in business for heat pumps, solar panels, and other green infrastructure? Well, these products are definitely a part of our assortment and also a part of the increased assortment. If we are looking at any business from an M&A point of view, we will share that with you. Are we taking measures to counter increased risk on receivables? Yes, indeed. We will have a close look at the inventory each quarter. Obviously, it will be part of my job and our job in management to try our best to take the risks into consideration.
As you know, we have credit insured the larger customers, and we have a provision ready for the smaller ones, and we will as well end of year. Do you believe that recession-like scenario could bring more M&A opportunities, and are we prepared to take advantage, also in case such M&A will reduce our solvency rate below 40%? Well, I expect during an economic downturn that we will be surrounded by lower prices. I do expect that we could see M&A opportunities. As you will know, companies were traded relatively high on multiples during the past years. One would expect prices to reflect the new climate.
We will be prepared to take advantage of that. We will also be prepared to take advantage of that in case the solvency reduces to below 40%. We just proved that. Are you expecting any bigger decrease in working capital, or have we arrived at a new normal due to the larger number of SKUs? You'll probably see a lower working capital end of Q4 because as you know the last month of Q3 is a very big sales month, and the last month of Q4 will be a lower one. Traditionally we hav e a lower tied-up capital in the working capital end of Q4 than end of Q3.
We are destocking inventory whenever we feel that the situation has normalized from a supply point of view. We have also said during the past webcast that if it comes to either having a little bit too much stock or to disappoint a customer, we want to make the customer happy. I think that concluded the questions we had. If you don't have any more questions, we'll take the opportunity to thank you for participating and see you next time to the Q4 webcast at the 21st of February. Bye for now.