Conference call for Q4 and the Full Year of 2022. My name is Elisabeth Klintholm, and I am Head of Investor Relations and Group Communications here at Nilfisk. To cover our Q4 2022 results, today, we have our CEO, Torsten Türling, and our CFO, Reinhard Mayer, presenting. During this presentation, we'll cover four topics. First, Torsten will give an update on the numbers and the key drivers for both Q4 and for the full year of 2022, followed by a Business Plan 2026 update. Reinhard will give a detailed run-through of our financial performance during the year 2022, and after this, he will comment on our outlook for 2023.
As this is the last quarter where we report on the current segment structure, Reinhard will then finish off by presenting the new financial reporting structure that starts with Q1 2023. We appreciate that you take time to listen in on the call this morning. The presentation today will take approximately half an hour, and after which we look forward to taking your questions during the Q&A session at the end of the webcast. Moving on to slide two for the usual practicalities. Before we dive into today's commentary, please note that this presentation, including remarks from management, may contain forward-looking statements that should not be relied upon as predictions of actual results. For more details, I refer to this slide and to the disclaimer that you can find in the annual report. With this, I welcome you, Torsten. We are ready for your message on 2022.
Thank you very much Elisabeth. Good morning to all of you. Thank you very much for joining us in this earnings webcast this morning. I'm looking forward to sharing with you the highlights of our Q4 and full year results, as well as the related business drivers. Please go to slide four for the highlights of Q4 results. Q4 2022 concluded as the quarter with the strongest results of the year. We managed to deliver the promised margin recovery. We continued the growth trajectory. We reached revenue of EUR 270.3 million, corresponding to 3.7% growth versus prior year. We achieved sales growth in our branded professional business across all regions, Americas, APAC, and Europe. The growth in Americas was still limited by the available capacity. The order backlog situations remains high as a result.
Our revenue in the consumer and private label segment continued to decline in the quarter in line with the related end markets. When it comes to EBITDA before special items, we reached EUR 39.5 million, corresponding to an EBITDA margin of 14.6%, the highest in the quarter and well up versus prior year. The various pricing initiatives throughout the year supported the margin recovery in the fourth quarter. Moving to slide five and the highlights of our full year results. We delivered organic revenue growth and EBITDA margin before special items in line with the updated outlook provided on October 26, 2022. In the full year 2022, we delivered the second consecutive year of substantial revenue growth. Reported revenue grew by 7.5% to EUR 1 billion 69.5 million. Organic revenue growth landed at 4.9%.
Our focus on resilient strategy execution was instrumental in fostering continued revenue growth. The key driver of our growth is our Branded Professional business, which grew organically by 8.6% in the year. All regions contributed to this growth. The business in the Americas region stood out as the strongest growth driver. EBITDA before special items reached EUR 140.8 million, corresponding to an EBITDA margin of 13.2%. This is our second-best result so far. To put those results somewhat in perspective, we are outlining on the following page some of the key challenges we faced in 2022. That was a year that faced us with several quite severe unforeseen challenges. The most outstanding one is the invasion of Russia into Ukraine, which created a humanitarian catastrophe. It had severe implications on the overall economy.
Nilfisk decided very fast, early March 2022, to discontinue business in Russia. We are now in the finalization phase of a liquidation process. This represented around EUR 10 million of revenue that Russia represented for us in 2021. The war caused an energy crisis next to the humanitarian issues and further fueled inflation. Cost inflation levels reached an all-time high, not seen before in the last 40 years. Central banks countered inflation with rapidly increasing interest rates. This context led to an economic slowdown, in particular in our consumer and private label business in Europe. Our main focus in 2022 has been on implementing our Business Plan 2026. This plan and its guiding principles have helped us already in 2022 to weather the various challenges of the year and drive resilient strategy execution.
As part of our Optimize Europe initiative in the business plan, we upgraded our pricing practice. Our focused execution on pricing helped us increasingly better throughout the year to cope with the high inflation levels. A highly disruptive event in 2022 was the destruction of our U.S. distribution center end March 2022 by a tornado. This had severe consequences on our ability to supply our customers. As part of our Business Plan 2026, we had developed a framework to enhance the robustness of our supply chain. This framework served us well to restore operations in record time, even if output levels have been a bit volatile during the ramp-up until year-end. You can well see on the graph the very rapid re-resumption of the operation, but then some up and down before we reach about normal levels.
Finally, our strategic priorities to develop service as a business helped us to mitigate the continued supply chain challenges we saw everywhere throughout the year and supported our customers with responsive service. Let's move to slide seven for some additional comments on the progress of execution of some other elements of the Business Plan 2026. A key priority in our Business Plan 2026 is to grow business in the large-scale U.S. market. In 2022, we continued to substantially grow in the Americas region, and in particular in the U.S. We succeeded and delivered 24.7% reported revenue growth. As a result of this extraordinary growth, the share of revenue from the U.S. rose from 25% to 30% of total revenue. This sales growth in the U.S. was achieved despite and constrained, however, by the incident of the US DC.
Ending 2022, we still have a significant number of orders remaining in the U.S. and therewith a continued high order book. A second key strategic priority is to develop service as a business. During the year 2022, we made major progress. We established service business in the company with dedicated reporting, with a dedicated service leadership team who developed a plan, a detailed execution plan, on how to drive further growth and profitability improvement. Within the year, we did drive top-line growth and achieved top-line growth of 8.5%. Successful pilots have been run in how to more efficiently dispatch our service technicians, leading to an increased productivity of 15%. That new dispatch technology is now rolled out throughout the territory and will drive efficiency to new levels. Thirdly, we'd also made progress in implementing overall new ways of working.
Those new ways of working apply to everything we do in Nilfisk. One of the key pillars of this is what we call the Nilfisk Operating System, which is a problem-solving, root cause analysis, process improvement methodology. We trained several hundred people in the organization with that methodology. We applied that methodology on root cause on issues like the USDC or other issues, and we got to very tangible outcomes after applying this methodology. We continued the digitalization of the company with our focused rollout of SAP implementation in the Americas region. Finally, we are implementing a more customer-focused operating model with a more regional end-to-end responsibility or business unit responsibility and a more end-to-end customer value responsibility throughout innovation, service, and customer experience. Those new ways of working will be fundamental to continue successfully executing on Business Plan 2026.
Finally, we have embedded also ambitious sustainability targets in our strategy and made sustainability commitment a key pillar of our value proposition. Moving on to slide eight, we share the progress we made in 2022 on the sustainability initiative. As part of the sustainability commitment, we have formulated highly ambitious carbon emission reduction targets to be achieved by 2030. Those targets have been validated and approved by the Science Based Targets initiative. We made good progress in the year 2022. In the Scope 1 and 2 emission reductions, we achieved a 10% reduction, well on track towards the overall roadmap of 35% emission reduction in Scope 1 and 2 by 2030. In the Scope 3 emissions, we achieved 11% reduction in 2022 versus far prior.
Also here, well on track, on the journey towards a 48% reduction by 2030. When it gets to the social dimension of our sustainability commitment, we also have made progress in one key metric we have chosen ourselves to improve on, which is the proportion of women in senior leadership position in the company. We have increased that ratio from 14% in prior to 19% in the year 2022. Our short-term target for this is to continue to improve to a minimum of 25% female population in our senior leadership. We are reaching out twice per year to our employees with a engagement survey. The survey results show a very high engagement score of our employees of 8.1.
This compares favorably to an industry average of 7.6 and underlines the engagement of our employee base to our strategy going forward. On the broader governance dimension, we continue to put tightest measures onto us and strive for improvement. In this context, we have been awarded a Gold rating from EcoVadis in 2022, improving from Silver in 2021. We complement our sustainability commitment with a commitment to human rights for which we have developed a corresponding policy. This concludes my summary of the highlights and the Business Plan 2026, and with this, I hand over to Reinhard for more details.
Thank you Torsten. Let's turn to the financials on slide 10. Our revenue of EUR 1,069.5 million was driven by increased revenues across all regions, with Americas being the largest contributor with an increase of EUR 75.9 million from 2021. This robust result was driven by a strong market demand, leading to increased revenue from direct sales to large strategic accounts. Revenue from the dealer channel also contributed. In addition, pricing actions benefited revenue. Europe achieved growth across many markets, supported by strong pricing execution. The economic slowdown in Europe was visible on the demand side. However, Europe still managed to deliver a revenue increase of EUR 15 million. APAC delivered EUR 7.6 million increase, supported by strong growth in the Southeast Asian markets and Australia. We saw negative growth in China due to COVID-19 lockdowns until early December.
All in all, branded professional revenue grew with almost EUR 100 million. Some of this revenue growth was offset by consumer and private label, which declined EUR 13.3 million and EUR 10.6 million respectively. Both declined in line with their respective markets as they were impacted by the reduced consumer confidence throughout 2022. Summing up, revenue increased with EUR 75 million or 7.5%. Turning to page 11. The reported growth was 7.5% and represents an organic growth at 4.9%. Foreign exchange rates had a positive impact of 3.4%, with US dollar as the main driver. This was partly offset by a negative impact of 0.8%, predominantly driven by the ceased trading activity in Russia.
Looking at branded professional, growth was the strongest in America where organic growth came in double digit at 12.5%. In Europe, organic growth for branded professional reached 6.7% whilst APAC came in at 4.6%. Overall, branded professional performed strongly and grew by 8.6% organically. As mentioned on the previous slide, both consumer and private label business declined in line with their respective markets, leading to an organic decline in revenue of 15.2% and 15.7% respectively. Moving to slide 12 and the gross profit and gross margin development. Gross profit for 2022 came to EUR 422 million, an increase of EUR 19.3 million. The increase in gross profit was driven by branded professional growth primarily in Americas. While the gross profit increased, the gross margin declined.
The gross margin came to 39.5% compared to 40.5% in 2021. Most of the revenue growth in 2022 came from Americas, the lower than average gross margin in that region drove some of the gross margin decline. In general, the gross margin pressure came from continued increase in raw material cost, lower capacity utilization at our manufacturing sites, and increased freight costs seen during the first six months of 2022. The destruction of our US DC also impacted gross margin negatively as our ability to perform service and repair was impaired for the period after the incident. The two price increases executed during the year partly offset the negative effects of the inflationary pressures. Moving to slide 13.
The overhead cost ratio was stable at 32%, reflecting continued focus on strict cost management while still investing in our Business Plan 2026 growth initiatives. For the full year, overhead costs came in at EUR 342.5 million and increased by EUR 23.9 million compared to 2021. Foreign exchange rates affected EUR 9.6 million of this increment. Looking one level deeper into the evolution of our major spend categories. Our sales and distribution costs increased by EUR 15.9 million and landed at EUR 243.5 million. Foreign exchange rates cost EUR 8.7 million, whilst the remaining increase was driven by higher activity in our large-scale U.S. market, cost inflation, and outbound freight. Administration costs landed at EUR 70.1 million and rose by EUR 6.3 million to prior year.
Main drivers were our investments into BP26, with focus on our digitally enabled new ways of working as well as effects from cost inflation. In addition, foreign exchange rates contributed EUR 1.2 million to the reported increase. Total R&D spend increased by EUR 5.2 million compared to 2021, and amounted to EUR 30.8 million. This is equivalent to 2.9% of total revenue, an increase from 2.6% in 2021, and follows the strategic pathway laid out in Business Plan 2026. More specifically, the spend in R&D was driven by investments into modular platforms and software development. Expensed R&D rose EUR 2.5 million, while amortization, depreciation, and impairment of R&D declined EUR 0.4 million. Subsequent total R&D expenses grew with EUR 2.1 to EUR 31.2 million.
Moving to the EBITDA margin development on slide 14. EBITDA before special items amounted to EUR 140.8 million in 2022. This resulted in an EBITDA margin before special items of 13.2% compared to 14.5% in the prior year. The decline in EBITDA margin before special items was driven by the lower gross margin that I detailed out on slide 12. Looking into the branded professional business, Americas contributed positively with EUR 9.4 million to the EBITDA profit. At the same time, the margin declined to 17.6%, predominantly driven from the high inflationary pressure and the USDC incident. In Europe, we saw a small reduction in the contribution of EBITDA profit and margin, which landed at 26%. As with the Americas, the main driver was high inflationary pressure and lower factory utilization.
The APAC region did achieve a modest EBITDA profit and margin increase, as inflationary effects were significantly lower than in the other two regions. The Consumer and Private Label business reported a significant decline in their EBITDA profit contribution of EUR 4.3 million and EUR 4.5 million respectively, and were the main drivers of the declining EBITDA margin for the group. Moving on to cash flow, working capital, and more. Free cash flow amounted to EUR 54.5 million, down EUR 4 million compared to 2021. Let's look at the most important factors. The lower operating profit was more than offset by cash inflow from changes in working capital. Working capital increased with EUR 26.4 million year-over-year, and related cash flow effects was EUR 29.2 million. Both changes were significantly smaller than in prior year.
Working capital was positively impacted by the non-recourse factoring program that we initiated in autumn 2022. Factoring reached EUR 21.2 million at the end of 2022. Total cash flow from operating activities in 2022 was EUR 7.3 million higher than in prior year and came in at EUR 82 million. Cash flow from investing activities for 2022 increased by EUR 11.3 million compared to 2021. This was driven by significantly higher CapEx investments for the US distribution center rebuild, strategic R&D investments, and the acquisition of an additional 5% minority share from the company M2H. The CapEx increment accounted for EUR 8.9 million. Summing up, in a challenging year, we have achieved a satisfactory free cash flow of EUR 54.5 million.
Total net interest-bearing debt in the year declined by EUR 13.8 million to prior year and came to EUR 324.7 million. The gearing is unchanged to last year. This concludes now the financial section. Let's move on to slide 17 for the outlook for 2023. Looking into 2023, we expect that the current macroeconomic uncertainty will continue, leading to some volume decline, particularly in the European market. As a result, we expect organic revenue growth in the range of -2% to +2%. This is supported by the full year effects of our pricing actions and a substantial order book from 2022. Negative organic growth would require current trading conditions to worsen. The range for the EBITDA margin before special items is expected to be 12%-14%.
Given our ongoing initiatives and investments in structurally improving the business, our financial targets for 2026 are confirmed. Now to slide 18 and the new reporting segments. As announced at our Capital Markets Day in April 2022, we have been working towards a new segment reporting that supports Business Plan 2026 and is aligned with our growth platforms. This is a natural step in providing transparency on our financial progress of our strategy. The segment reporting is to be implemented from Q1 2023. To ensure a smooth transition, we have made the historic data for 2021 and 2022 by year and quarter available now. Let's have a closer look at what we are changing on the segment reporting. The new segment follow the business categories in Business Plan 2026 and is aligned to our organizational design.
We will provide revenue, gross profit and EBITDA before special items by segment. Let me high level introduce to you the new segments. Professional business is covering all professional machines from Floorcare, vacuum cleaners and high-pressure washers, and includes our private label business. Service business that contains a comprehensive range of service solutions throughout the life cycle of our professional cleaning equipment. It also includes parts, accessories and consumables, which we abbreviate with PAC for the professional business and the industrial vacuum solutions, in short, IVS. Specialty business is covering IVS and Nilfisk FOOD. Service and PAC are included for Nilfisk FOOD in this segment. The consumer business is covering consumer machines, service and PAC related to consumer products.
Finally, we have now a new segment called headquarters, which covers overhead costs related to typical headquarters activities such as group management, group reporting, investor relations, corporate social responsibility, corporate communications, et cetera. As mentioned, we will report on this new structure from the next quarter on. This morning, we issued a company announcement with a segment report presenting the comparison figures for 21 and 2022, and we have also made an Excel file with the numbers available. With that, on to slide 20. We have concluded now the presentation and are ready to take questions from you if you have. Operator, over to you.
Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question comes from Claus Almer from Nordea. Please go ahead.
Thank you. Yeah, a few questions from my side. The first is, when we talk about ASP, you made several, you know, price actions in 2022. What should we expect for a full year effect going into 2023 from these price actions? That would be the first question.
Good morning Claus. Thank you for the question. Let me take this. We have done in 2022 two major price increases beginning of the year and then during the year. First effect for 2023 is a full year effect of what we did in 2022. We also announced early in the Q4 the regular annual price increase for 2023. We'll have those price effects combined. We have dimensioned those price effects to cover for inflation. That's just what we have dimensioned them for. We have been, as you have seen in the numbers, successful in implementing those throughout 2022. Spillover from 2022 and new pricing 2023.
What is the magnitude? That was actually what I'm trying to figure out.
Yeah, we, I guess so, but we are not, we're not sharing precise numbers on the magnitude beyond what I tried to allude to by saying we dimension the price increases to cover for inflation. As we have seen in the last year in 2022, that those measures come through with a bit of a time delay of a quarter, a quarter and a half. If we see inflation being higher than what we originally forecasted, like we saw in 2022, we do an in-year adjustment. The only broad direction we can give you, Claus, is that we dimension pricing to cover up for inflation.
Okay. Do you still see cost inflation, going into 2023?
Indeed, we do. A lot of cost impact we saw in the H2 of 2022. This will also have a full year effect. Then everyone comes forward with price adjustment, cost adjustment on the supplier base. We do expect further inflation impact in 2023. This is at least the assumption for which also we have set our pricing accordingly.
You know, it's always difficult to raise prices ahead of inflation. Would you still be lacking, or are you more on the cost curve, so to speak?
It depends on how inflation will evolve, which is one of the uncertainties in the macro environment. If inflation stays the same, so it still stays up on a high level as we have seen it, we should be covered. If it's getting worse, we need to act. If it's getting better, we will be happy. We are, we are set for a base assumption, but there is a bandwidth of uncertainty how inflation will go throughout the year.
Okay, that makes sense. You know, in the report, you mentioned that, you see a very strong, or maybe not very, but you see a strong, order backlog. We have heard this, you know, throughout 2022. A strong backlog is very difficult to reconcile with a declining volume, development. Maybe you can try to explain backlog. Now we only talk about value terms or how do you know, translate a strong backlog with a declining volume development?
Thank you Claus, for this question. I think actually one of the answers was already provided by Torsten in his presentation that this lion's share of our order backlog actually resides in some of the products which we produce in the U.S. and is actually U.S. related. Whilst the order backlog is not so much driven by Europe. That explains as well where we on the other side see the volume decline. That is so to say the takeaway you need to have. There are still strong order book predominantly for the U.S. market, where we still struggle to really maintain the higher demand. On the other side, we have factories and service in Europe which have a lower order backlog, and for which we have also a volume and demand decline.
Lower backlog, is that as a negative trend or lower versus the U.S.?
Well, it is lower versus the U.S., first of all. It followed, so to say, also a slowdown in the economy in Europe.
Okay. That makes sense. Thank you so much for the answers.
Thank you, Claus.
The next question comes from Kristian Johansen from SEB. Please go ahead.
Yes. Thank you. I have two questions. First of all, looking at your leadership team as it's presented in the annual report and then comparing it to the leadership team you had when you did the CMD last year, I noticed that four out of the eight people in the leadership team at the CMD no longer is part of the leadership team. Can you elaborate on the changes you have done and also whether there are any open position in your current leadership team that you are hoping to fill?
No, Kristian thank you. Good question that allows me to clarify how we have evolved in our operating model to implement the strategy. It follows the guidelines we have laid out in the Capital Markets Day. That was early April, just two months later, we created an Americas region. What is a region? Region is a business area with end-to-end responsibility across the functional areas and for the results. We put Jamie O'Neill, a well-experienced leader of us, onto the Americas leadership position. We added to the leadership team later in the summer in August, a senior leader for our strategic initiative to develop service as a business.
Anupam Bhargava joined us late summer and has established a service leadership team. But this is also a name that we introduced, but you saw finally on the page already now. In the most recent evolution, we benefited from the opportunity to put an end-to-end responsibility for the customer value creation. With this, we mean from customer need capturing, developing the solution, managing the product portfolio, servicing it, and taking care of the customer over life cycle. This end-to-end responsibility was given to again, Anupam Bhargava, and which incorporated the global R&D responsibility, out of which the name on the org chart presented in April disappeared.
To your question, what is more to happen, in line with the America's region, and also in the broad spirit of the segment reporting and how we get operating model closer to the customer, and encouraged by the success of the Americas region, we also create a regional organizational setting in Europe. Temporarily, I'm covering the lead for Europe, but we'll have in the future a regional lead for the EMEA region as we have this for the Americas region. A final change, not in the definition of the position, but in the names on the chart, we have a new chief operations officer, Petros Kapellas, who joined us earlier in the year.
You see his photos and bio in the annual report, and he was not with us a year ago. He is succeeding Søren Pap-Tolstrup, who took an opportunity outside of the company, and continues our, the implementation of our global operations strategy. Finally, and also very important, we have a new HR leader helping us enormously in the people dimension of what we want to implement with Business Plan 2026. Here it's a succession solution driven by health reasons of the predecessor, Jacob Blom, who presented to you in the Capital Markets Day. This is the background of the evolution of the senior leadership team, Kristian.
Perfect. That was very clear. Thank you for that. My second question is just on your demand comments from Europe 'cause obviously you have more than 5% organic growth in Europe for the first quarter in the professional business. How much of this demand decline have you seen here in the beginning of the year so far? How much is based on, you know, looking at macroeconomic indicators and what you would expect for the remaining of the year?
As we commented, on the macroeconomic climate deteriorated in the H2 of the year. That had first a major impact on our consumer and private label business, and then a little bit broader on our business in Europe. What we saw ending in the fourth quarter is in line with that trend. Didn't get worse, it didn't get better. It's in line with that trend. We have some softening in volumes. That's not the same across all the categories. Some categories are holding up stronger, namely the Floorcare segment has the strongest performance. Our service business continues to grow.
Then we have the high-pressure washer business who is mostly impacted by the decline in the agricultural segment. Then the vacuum cleaner business a bit in the middle, mostly related to the evolution of the construction industry segment, building and construction, which overall Europe also slowed down a bit in the H2. All of this is visible in our Q4 numbers. Despite that, we were able to deliver growth.
Sure. Have you seen a further deterioration here in January and February?
No. We are continuing on the same trends. Not better, not worse.
Understood. Very clear. Thank you so much.
Thank you.
The next question comes from Casper, Casper Blom from Danske Bank. Please go ahead.
Thank you very much. First question, and I'll take them one by one, but first question relates to your product portfolio. I think, at the CMD last year, you mentioned that when you guys took over, you were not completely satisfied with the product portfolio of the, how to say, bread and butter business of Nilfisk. Has that been fixed now? Do you offer customers the products that are needed today? That's the first one, please.
No, great question Casper. Thank you for, thank you for this. This is a question refers to our innovation pipeline. Unfortunately, innovation pipeline is not a, it's not a quick fix. We brought a lot in the pipeline, in the roadmap in the last, in the last 18 months. It takes time to innovate, it takes time to develop, and it will at some stage, be launched, into the market. We have not seen the benefits of those products, but we are confident that one of the key pillars of the business plan is to lead with sustainable product, that this will come through in the H2 of the business plan period. We'll not expect so much upside from this in this current year.
It's not visible in our financials except you saw, you heard from Reinhard before, higher investments into R&D, and those will result into new products and innovation. Things take time. We are not with what we supply today to the customer. We have a good product offer. We have a stepped-up service, but there are super exciting things to come and in the pipeline.
Okay. And 2024 is when we'll start seeing it?
Yeah, we'll not educate too much, everyone, but.
Competitive.
We have.
Yeah. Right.
let me answer this way, Claus. We have a full pipeline now for innovation in the for the full business plan time horizon. we'll launch. Some of it will be launched still this year. More next year, more 2025, more 2026. we have a full mapped out and fully resourced roadmap. Yeah. it takes a bit time to develop and innovate and develop. We start bringing things to market in the H2 of this year, and then we'll have a regular cadence every year.
Okay. Fair enough. Second question is regarding the service business. I appreciate the new business split up where we can contract the service business nicely. I was wondering to what degree will the service business growth depend on, yeah, growth in basically the professional business that you sell new machines? I mean, is it possible to have a year with muted growth within the sale of new machines and still see, I would say, solid growth within service?
I'll give it a first shot and then hand over to Reinhard for the second part of the answer. very, very clear yes, Claus. Why is this? We have hundreds of thousands machines in the installed fleet. We are among the leaders globally in our industry. We have hundreds of thousands of machines in the installed fleet. We have a very small proportion of those machines linked to service contracts. We have stepped up our effort to sell new machines attached with service agreements. This is steadily growing. We have a tremendous opportunity to take care more and develop service business with the installed fleet. Yes, the growth of new equipment will further fuel, but it's not the only source of growth for the service revenue. That's my first go at it. Reinhard.
Yeah. To add to that, basically the other growth option is, as I laid out in the segment reporting, we have a parts, accessories, and consumables business, which is now in a more, let's say, professional focus on how to market these offerings which we have. Then to a hopefully larger installed base on contract is going to deliver an, let's say, internal growth opportunity. That alone will give us, let's say, substantial organic growth in the years to come.
Okay. If I may follow up. First, Is it possible to sort of sign service agreements on stuff that has been sold, let's say, a year ago? Or does it require sort of a new sale of a machine to do that? Secondly, would you be willing to give an update on your service attachment rate as it is today? You previously mentioned that when you started looking at this, it was below 10.
Yeah. Let me answer the first question first. I mean, well, there's nothing which holds us back to tap into, let's say, the machines which are out there in the market in use, but not yet contracted in. That's one of the drivers which we are focusing on in 2023 and 2024 onwards. The second point in a way is, we are not, let's say, discussing the results so far. As said in my presentation, we will really deep dive more in the new segments in quarter one. We have provided you and the investors now with relevant compare figures for 2021 and 2022, but we are not going to go into details because that would be outside of the 2022 closing.
Maybe, one additional comment.
Okay. Fair enough.
C laus to this.
Casper.
Sorry. Casper, yeah. Excuse me. Casper. We get thousands of calls from customers every day, for all kinds of questions, shipment timing and so forth. Also here and there, a repair call. Every of those customer interventions is an opportunity to tell the customer, "Look, you called us now for a repair. Why don't you conclude a service contract?" Yeah. It's even a better opportunity and a much wider opportunity in terms of number of occasions to conclude a service contract than with a new machine. We have plenty of opportunity beyond the new machines to sign up service agreements.
Okay. Fair enough. My final question. I noticed that you include the private label business as part of the professional business going forward, while the consumer business is sort of left on its own. Should we read anything into this in terms of how core you see the consumer business going forward?
It has actually more to do with the composition of the product segments. In the end, private label is nothing else than another vacuum cleaner, but with another label on it. This is more logical reasoning for actually bringing that together with the professional equipment. Whilst the consumer business was standalone as reported, is going to be standalone as reported, and I think we have opportunities there in the years to come. We are actually seeing 2022 and potentially 2023 as well, a muted environment given, let's say, the significantly reduced consumer confidence. That will get back.
Okay. You are happy owning a consumer business?
I'm not happy with the decline. I'm not happy with the margin decline. Is that putting a question mark behind, so to say, the going concern? No. I will not say more.
That's clear. Thank you.
As a reminder, if you would like to ask a question, you may press star followed by one. The next question comes from Mads Quistgaard from Carnegie. Please go ahead.
Yes, thank you for taking my questions. First on factoring. Reinhard, what is the main explanation for introducing factoring in this quarter? That'll be my first question.
Well, what is the main introducing not in the quarter, but introducing it at all. It actually has to do that all the finance wants to contribute to earnings per share increase. We actually, with factoring, we are getting an opportunity to reduce our financing costs short-term versus long-term. That's the only reason for that, and that was the main driver. We expect actually some nice contribution from improved financial cost due to factoring.
Okay.
We have been working on a program. Some programs take time to get implemented and, so, yeah, that's what we did in autumn 2022, and we have reported on this now for the full year when it became relevant.
Okay. maybe you could put some words on, working capital management and also free cash flow for this year, also given that you now have, you know, more factoring.
Yeah. I mean, the factoring you should not see as a, let's say, an unlimited pot. We have, I think, lift up to the point of EUR 21 million as a factoring amount towards end of the year. There might be one or two million or a couple of million more towards 2023, it's not really growing large to the amount from there. It's more a structural improvement on financial cost as such. The working capital has actually improved as well on our inventory level significantly in the fourth quarter. Some of our actions deliver result now. Of course, a strong Q4 finish has helped to contribute on that. We still expect that we see sort of the same improvements to come in the working capital environment.
All right. Do you plan for any special items this year?
We are not guiding on special items, so I cannot really, let's say, give you a specific answer to that.
Okay. My final question is on the order backlogs. Are you able to reprice any of the current orders in your backlogs if it is becomes necessary?
As Reinhard pointed out before, the majority of the backorder situation, so where we are, where we are kind of constrained with supply, is in the U.S. To reprice those is a difficult undertaking. We have worked a lot in 2022 on this, but there is limits to do this. Sometimes we have engaged a contractual commitment that we need to honor. If the shipment comes a bit later due to limited capacity, then not always it's possible to pass on the higher meanwhile the higher cost. It's not a black and white here. We have been partially successful, but it's a difficult, it's a difficult undertaking. It ma-mainly relates to the supply limited order backlog in the U.S.
Okay. Per, if I may, one more question. In terms of the autonomous machines, how much do the autonomous machines account for group sales today?
Less than 1%.
Less than 1%?
Yeah.
Okay. Okay. That was all from my side. Thank you.
Thank you.
We have a follow-up question from Claus Almer from Nordea.
Yeah, Hi. Just to follow up on this comment you made about possible one-off costs, and you're not guiding on that. Does that mean you are planning, but you don't want to disclose, or does it mean that you, at this point, do not plan to do any one-off costs? I think that's kind of important topic.
Yeah. I would like to stick with my, let's say, comment that we are not guiding on it, and we are not giving an answer to this one. I mean, when we have a plan, we communicated that plan, it's public knowledge.
Okay. That sounds with a declining volume that we should suspect, I don't know, EUR 5 million-EUR 10 million of one-off cost this year.
I said I am not commenting on that. You will not get an answer to me on that. We are not guiding. We have no concrete plans. Otherwise, we would announce that to you. We don't rule out that there might be special items.
Maybe, this is typical analyst, but I'll try to ask in another way. If things are not deteriorating more than you see today, would that mean no special initiatives or the likes, or that we can't rule out even in the current environment?
I mean, Claus, I cannot really answer that because in the end, it's not depending only on that. It's also depending on our business plan, evolution and then what opportunities we see, or what comes from outside to us. I mean, we spoke about a USDC destruction event. Nobody has planned for that. We heard from Torsten about our impact from the Ukrainian war leading to a close down of our Russian activities. You know.
Sure. I mean, we are out in those scenarios with another war or, you know, a hurricane or like, then that's fine. Yeah, just trying to figure out whether there might be other, maybe more likely scenarios that could unlock new programs. As I recall, and I might be remembering wrongly, as I recall, the message in the past has been no more one-off costs, no more programs. That's why I'm just asking.
I don't know who said no more. I certainly didn't say. I think we have one of course, if there is clear opportunities to improve result going forward, which would come with, let's say, some special items for reorganizing, let's say, our either set up or group or around the products. There could be different reasons for that. You know, as we don't have a specific plan in front of us, I will not give you a answer to that, but I don't rule it out because we are always working on optimizing opportunities.
Sure. Okay. That was all for me. Thanks.
We have another follow-up question from Casper Blom from Danske Bank. Please go ahead.
Thank you. Two things actually. First of all, I was just hoping if you could sort of give a little bit more flesh to the current supply chain situation. I mean, are we now at a point where you can get the materials you want within the time you want to? Thinking about, you know, semiconductors and some of the other stuff that have given you worries in the past. Secondly, in a theoretical scenario where things deteriorate macro-wise. Let's say that volumes are all of a sudden down 5% or 10%, what would be sort of your immediate reaction to that? I suppose you have a plan in the drawer to pull out if things would deteriorate significantly. Thank you.
Thanks for the question, Casper. The supply chain situation has improved. We are almost back to normal with our delivery performance to the customers in Europe. We still have issues on items like semiconductors, some hydraulic parts, and a few other items. Also there, they're still there, but are getting softer. Other categories have been almost back to normal. Where we continue to have a more severe limitation is on supplying in the U.S. market or materials into our U.S. factory for the materials we need, we need there. Here, we are still constrained, and that explains the biggest proportion why we have the biggest proportion of our back order situation in this geography.
Here, the capacity constraint will continue for most part of this year. We increase capacity, but the orders, the demand we have still goes beyond that. We could do more, we have still a constraint, but we continue working on this, increasing the capacity gradually step- by- step, but constraints continue to exist. This is on your first question. The second question, of course, we are in a phase of high political and economical uncertainty.
We made scenarios for the market's return to growth, the markets stay as they currently are, the markets decline further, and we have prepared plans for partially for the draw, partially, we are implementing to be prepared for the base case scenario and for a bandwidth around the base case scenario. We feel we are well equipped, first, with the business plan initiative, which continue to be valid, which helped us already last year. We spoke in your prior questions about the opportunity to grow service as a business. That is almost, not fully, but almost neutral from how the market further evolves, but other things obviously, not.
We are prepared for this, without us not being in a condition to declare what exactly we would do in what exact scenario, right? We see high uncertainty, and that's why we're also prepared for a bandwidth of outcomes.
Okay. Fair enough. Just, and I promise this will be the final one on the U.S. supply chain constraints. Just to be sure I understand, is it a bottleneck within your own organization, within your assembly plants in the U.S., or is it a bottleneck among your sub-suppliers?
It's predominantly with our supplier base. Yeah. They need to ramp up capacity. We have already within our plant ramped up assembly capacity. We have sufficient assembly capacity. We need to make sure that we have all our supplier ramping up. We have most of them, yes, but as long as you have few components missing, you cannot complete a product. It's not 100%, but mostly on the supplier base, which is the constraining factor.
Perfect. Thanks a lot, Torsten.
Super.
There are.
Go ahead, operator.
Sorry. There are no further questions at this time. I hand back to CEO Torsten Türling.
Thank you very much operator and thank you all very much for joining us in this call and for your for your questions. We're happy to share with you the Q4 and full year results. A second year of substantial revenue growth. A year of quite severe unforeseen challenges, but we were reasonably well prepared to cope with those challenges with the initiatives of our business plan that have helped us well to weather those challenges throughout the year. We feel ourselves well equipped to continue implementing successfully Business Plan 2026, and we have reiterated the financial targets that relate to 2026. We continue being fully focused on resilient execution of this. Thank you very much again for attending our call. We're looking forward to meeting you soon, and later to share the next quarter results with you in May. Thank you very much.