Good day, and thank you for standing by. Welcome to the Solar A/S Annual Report 2023 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link anytime during the conference. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Jens Andersen, CEO. Please go ahead.
Thanks a lot. Very warm welcome to this Fourth Quarter webcast for the Solar Group, but also our annual report, of course. Together with me here online, I have my colleague, Michael Jeppesen, CFO, Michael Jeppesen. The agenda for today is a general business update with some highlights for year 2023, presented by me. Then I will give you some, or an introduction to our new three-year strategy, which we have named Solve, including our targets and also strategic focus areas. Michael will then go into the financials and present you the Q4 results, including a high-level cash flow status, and that with some comments to our results for year 2023, but also our guidance for 2024.
Last but not least, you're more than welcome to raise questions, and we'll have a Q&A session. If we go to the highlights, as expected, we saw declining growth in the year 2023. Adjusted organic growth, at group level amounted to -2.6, and revenue declined to DKK 13 billion. Revenue from Climate & Energy, one of our strategic focus, amounted to DKK 1.3 billion and did not reach our expected growth rates at all, especially in the second half of 2023. On the other hand, EBITDA delivered as expected, and it was DKK 871 million, and that is equal to a margin of 6.7%.
It was well supported by one of our other focus areas, and that was concept sales, but also mitigating cost actions during the year. Over the past three years, and that is in the period of Core+ , we have made the best financial results in our long history, but also accumulated dividend payments of DKK 1.3 billion to our shareholders. As a part of this three-year strategy period, we have also invested almost DKK 1 billion in our business. With our recent completion of our warehouse, Alkmaar, we have now added more than 18,000 square meters of warehouses, installed three AutoStore systems, totaling 210,000 boxes and 250 robots, resulting in now three modern warehouses in Denmark, Norway, and the Netherlands.
We have decided to invest in a modern warehouse in Sweden, and thereby, we will complete our warehouse transformation within the coming years. As we see right now, 2024 will be a transition year with high rate of inflation, pretty low activity in all our customer sections, but also with the underlying prediction that the market situation will recover late 2024. In other words, we are more than convinced that electrification of the society will give us many business opportunities on the medium and longer run. Based on these assumptions, our guidance for 2024 is an EBITDA of DKK 600 million, based on a revenue of DKK 12.4 billion. Next slide, please. So, our new strategy is a combination of concept solution sales, especially within opportunities that emerge from the green transition.
We actively promote products and solutions that accelerate the green transition, not only for the benefit of our industry, but also for the wider world. With Solve, it's our ambition to maximize the growth potential with climate energy, and therefore, we have recently established Solar Industrial Solutions, where we now also offer climate energy turnkey solutions for our industry customers together with the installers. The target in 2026 is that climate energy should at least be a share of our revenue, above 15% of the total business. Increased profitability is, of course, a major part of our strategy, and we will still use our concepts to enhance that position in the value chain. The target is a gross margin improvement on the total business above 0.7%.
Last but not least, we want to increase our market share by delivering more solution sales, where we aim to increase the share of wallet with existing customers, but also attract new B2B customers. Here we have a target that this year should be above 20% of the total revenue in 2026. All the strategic focus areas are already core capabilities in the Solar group, and if I may say so, Solar Denmark is the most mature company in the group when it comes to those strategic focus areas. Our financial targets towards 2026 are an EBITDA margin above 6%, which is, if I may remind you, exactly the same goal we had in our Core+ strategy.
Our gearing is lowered a little bit, we have said that it is in the range 1.0-3.0, and that is changed from 1.5, instead of, it was 1.5-3 in our core strategy. Our sustainability towards 2026 are to reach 65% of our goal to become CO2 neutral in 2030, and that goes for Scope 1 and 2. That is to have 95% of our spend covered by Code of Conduct, and finally, also to be above 25% when it comes to diversity in our senior management. I will now hand over the word to Michael for some comments on the insights to regarding the financial. Please, Michael.
Thank you, Jens. Please turn to page 7. Starting with Q4. Revenue in terms of DKK decreased with 14% as we faced substantial headwinds in the markets and segments where we operate. Consequently, we came out slightly below DKK 3.2 billion compared to the DKK 3.7 billion we saw last year. This is equal to an adjusted organic growth rate of -11%. As we stated in the initial guidance we gave out in February 2023, we did expect the market to gradually turn more negative, particularly within everything related to construction. Regardless of this, we must conclude that the drop we did see in Q4 actually were steeper than what we expected.
One of the reasons for this is the development we've seen within climate and energy, which, as Jens mentioned, is one of our strategic focus areas. It did not reach the expected growth rates in Q4, despite actually we did see in Denmark, new government support for heat pumps. It did not really change the demand to the extent we had hoped. So we ended with DKK 256 million in revenue, compared to DKK 438 million last year. Regardless, we remain convinced that looking ahead, this will be a growth driver since it's a key solution to the green transition. I think also we need to conclude that we will probably not see the growth rates in this area, which we have seen back in 2021 and 2022.
Consequently, our new strategy do not assume such growth, growth rates either. If we look at Q4 and compare it to Q3, we can now see that all main segments are negative, whereas in Q3, only Installation were negative. If we take a quick look at the different segments, we can see Installation, as expected, were negative. This is to do with that in particular, Installation is the most dependent on construction, and we remain at -11 compared to the -10 we saw in Q3. Industry has now turned negative with -4 compared to 0 in Q3, and this is despite the positive growth rate that MAG45 continue to deliver. This basically means that all the sub-segments are now negative, with Marine Offshore only being slightly negative. Trade also saw headwind accelerating, mainly due to the loss of one major customers in the Netherlands.
Overall, it is, however, our assessment that we are not losing market shares. Turning to slide 8, please. When EBITDA of DKK 190 million in Q4, earning was actually on par with our expectations, despite the disappointment we saw in revenue. Lower costs were not fully able to compensate for the revenue declined, but several year-end activities supported the gross margin, so we ended, give and take, where we expected. If adjusted for one-off price effects in last year, the margin there ended at 6.9%, as you can see in the figure in the middle of the slide, meaning we have seen a drop of 0.9%. If you look at the adjusted gross margin last year and compared with what we saw this year, it's actually an increase.
It should, however, be noticed that it's due to lower freight costs, which were lower than normal, and we also had these year-end activities, which increased the gross margin. So the main reason for the setback we see is that there is a diluting effect from staff costs, which, despite the ongoing reductions that we've been carrying out throughout 2023, now is not falling to the same extent as revenue. Loss on trade receivable, we noticed, remains under control. Please turn to the next page. In absolute figures, you can actually see that it's not that we're not reducing in Q4. We are, despite the inflation, but it's not reducing to the same extent as the drop we saw in revenue in Q4.
Consequently, we'll continue to have a strong focus on initiatives, including cost containment, process optimizations, and staff reductions, in order to secure that we continue to reduce the cost to make sure that it fits the level, the activity level in the market that we see going forward this year. Please turn to the next slide 10. If we take a quick look at the full year, the EBITDA of almost DKK 0.9 billion, this is on par with our expectation, despite the disappointing development in Q4. As expected, we did see both cost and salary inflation. This was included in our initial guidance, and it has a negative impact of DKK 0.7. If we looked and compare to our initial guidance, the main negative surprise were the development within climate and energy.
We did actually guide on that we expected an organic growth of approximately 40%, and we came out flattish, which basically mean that we lack an estimated DKK 500 million in revenue. We managed, however, to reduce cost faster than what we initially planned to do, but as you can see, not enough to compensate for the drop we did see in Q4. This is also why our 2024 guidance expect restructuring costs of DKK 35 million. Please turn to the next slide. Slide 11, Q4 saw very strong cash flow, with almost DKK 500 million positive from operating activity, which I'll comment on shortly. Investing activities of DKK 87 million includes the DKK 22 million we have invested in Latvia, where we acquired some land which we'll use for forestation in order to be sure that we meet our ESG targets.
If we take a closer look at the operating activities, we're particularly pleased to see that the continuation of inventory reduction delivered a total of DKK 171 million. If you look at the drop in accounts receivable of almost DKK 300 million, it, of course, reflects the normal seasonality, but also, of course, the fact that we do now have two-digit negative growth. As expected, accounts payable when were reduced also with DKK 129 million. This is consequence of the reduced inventory. We simply buy less from our suppliers. Please turn to page 12. Net working capital, calculated as an average of the previous four quarters, amounted to 16.8% of revenue, versus 16.7% in Q3. But if you look at the net working capital at the end of 2023 and compared to last year, we see a decrease.
We're down to 14.6% versus 15.9% in 2022, and this is actually despite the negative effect we see in Q4 this year. If you take a look at the gearing level, we see a slight increase, a slight decrease, sorry, from 1.5- 1.3. Of course, this is supported by the normal seasonality, but also the fact that we are now gradually starting to reduce the net working capital. Of course, it's more challenged to reduce the net working capital, not in nominal figures, but relatively speaking, when revenue is reducing. But it's one of the advantages of this business model, that the main investment for Solar is net working capital, which means we can have a strong cash flow also, even though we are facing headwinds from the markets. Turning to page 13, guidance for this year.
As mentioned by Jens, we expect a revenue of DKK 12.5 billion, corresponding to a negative organic growth of -5%. This actually means that we expect a drop in revenue of DKK 650 million, approximately, when adjusting for FX impacts. EBITDA-wise, we expect DKK 600 million. In general, the market outlook is, as we see it, very unpredictable due to heightened geopolitical and macroeconomic tensions. However, we do expect a global recovery in the macroeconomic situations towards the end of the year. We expect all markets for 2024 to be negative. In general, we also expect all segments to show negative growth in 2024, but also that they will start a slow recovery towards the end of the year. Of the main sub-segments, only marine offshore is expected to be stagnant.
During the later part of 2023, we did see a loss in the underlying gross margin, partly in, because of, climate energy, but also in other categories. We expect this development to continue for the main part of 2024. In addition, we've decided to elevate our delivery service to a newer and better level, which will lead to increased freight costs. Consequently, we expect a lower gross profit margin for 2024. As expected, cost and wage inflation increased during last year. We expect this to persist throughout at least H1. Meaning looking after 2024, we expect this to normalize to a much lower level, which is also one of the underlying assumptions for our 2026 targets.
Given the unexpected revenue decline we saw in Q4, the guidance also includes further costs for restructuring, of which the main part will be here in Q1. If you take a look at the figure, it's a simple high-level bridge between 2023 and 2024. If we start from the right side, we expect a one-off profit from the sale of the central warehouse in Vejen, where we now are, we have centralized everything. We have expanded, as Jens also said, the central warehouse in Alkmaar. We will invest in new competencies in order to ensure that we deliver on our strategic targets. This is expected in total to have a negative impact of DKK 20 million and, as I said before, minus DKK 35 million in restructuring costs, meaning a net effect of minus DKK 25 million.
Loss of revenue, we can always discuss what the impact will be, but -90, -100, -110 is a fair guess if you take a look into the segment reports. Meaning that, so based on that assumption, you can see that the expected loss of gross margin and cost inflation will have a negative effect of approximately DKK 126 million. Bear in mind, when we do these calculations based on what we're losing in the net effect of lost revenue, we are, it, of course, requires staff reductions and savings, meaning it's not something that's built in automatically, because if you do not take action, the drop will be substantially bigger, meaning more less the gross margin. So to conclude, we expect, as I said in the beginning, that we will face headwind of -5%.
Contrary to what we said when we gave the guidance for 2023, we expect the first part to be the most tough part, meaning you should expect a very poor performance in Q1, in particular, also because Easter now hits Q1 full. But and then gradually to see an improvement during the year, also partly because the point of reference gets easier. So basically, you can say it's the reverse of what we said when we gave the guidance for 2023. Thank you.
Thank you, Michael. Now it's time for questions, so please.
Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. If you wish to ask a question via the webcast, please type it in the box and click submit. Please stand by while we compile the Q&A roster. Once again, if you wish to ask a question, please press star one and one on your telephone. There seems to be no audio questions at this time. I will hand over for the webcast questions.
Do we have any written questions?
No, no written questions.
Okay, then I will, thanks for, to all of you for, for listening in to this, fourth quarter or annual report webcast, and have a very nice day. Bye-bye.
Bye.
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