Hello, and welcome to the BIC full year 2022 results. My name is Caroline, and I'll be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen-only mode. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing Star one on your telephone keypad to register your questions. If you require assistance at any point, please press Star zero and you'll be connected to an operator. I will now hand over the call to your host, Sophie Palliez-Capian, to begin today's conference. Thank you.
Thank you, and welcome everyone to our Q4 and full year 2022 earnings call. The call will be hosted by Gonzalve Bich, CEO, and Chad Spooner, CFO. We'll start by a presentation of our full year 2022 results and 2023 outlook, followed by the usual Q&A session. Gonzalve, over to you.
Thanks, Michelle. Welcome, everyone. Thank you for joining us today to discuss our company's fourth quarter and full year 2022 results. Since the launch of our Horizon plan late in 2020, we've been providing insight into how the plan both grounds our purpose as a consumer-centric company and guides our ability to remain resilient in dynamic, evolving markets. In an extraordinary year marked by inflation and recessionary pressures amid soaring energy costs, supply chain disruptions, and consumer uncertainty, we put Horizon to its most stringent test yet, and I'm proud to say it delivered. Full year 2022 top-line performance was exceptional, surpassing our guidance, growing our net sales high single digits to double digits in all divisions, growing our EBIT by 11.4% and achieving our free cash flow target.
Most importantly, we remained laser-focused on our consumers, relying on our data-driven approach to deliver a continuous flow of premium product innovations that help in key regions across the globe. This momentum has us off to a strong start, and we will share more about our 2023 outlook shortly. I wanna start, though, with a full year 2022 operational results, followed by Chad, who'll take you through our financial performance in more detail. 2022 was a pivotal year of progress and growth for BIC as we doubled down on our investments in operations, brand support, R&D, and M&A. Today, we are more consumer-focused, data-driven, and innovative than ever before. We met our guidance with strong momentum and delivered on both top line and cash.
Net sales growth was outstanding, up 13.8% at constant currencies compared to initial projections of 9%-11% growth and well above our Horizon plan's mid-single digit growth trajectory. We achieved our target of more than EUR 200 million of free cash flow for the fourth year in a row, resulting in a combined total of nearly EUR 890 million in cash generation since 2018. Let me tell you about the key drivers behind this exceptional global growth across our divisions. In Human Expression, our performance was bolstered by the continued success of our classic products, including the iconic BIC 4-Color pen in Europe and the mechanical pencil and ballpoint in the United States.
With inflation persisting and families increasingly under pressure to make their money go further, now more than ever, consumers appreciate the strong value proposition that BIC products represent. We also performed well in added value products. One example being our line of gel writing instruments, for which sales have more than doubled in the last five years. In 2022, we outperformed the U.S. market in this segment ahead of our peers, boosted by our strong value positioning. Consistent with our Horizon goals, we have also actively grown net sales in products in creative and digital expression by 40% since 2019, a year before we launched our Horizon plan. In Mexico, for example, the Intensity range in pastel highlighters delivered over 50% growth. In Brazil, the creative segments of marking and coloring more than doubled net sales year-over-year.
All told, we've increased our entire coloring segment by 12% in the last five years. Our team's commitment to commercial excellence delivered robust back-to-school seasons in both hemispheres, with market share gains in key countries. In France, we outperformed the market for the 16th consecutive back-to-school season, further strengthening our number one position. In Mexico, we gained share for the second consecutive back-to-school season in the modern mass market channel, supported by breakthrough commercial communication campaigns and impactful e-commerce strategies. In South Africa, net sales saw double-digit growth during the country's most robust back-to-school season in six years. Turning to Flame For Life, we continued to address consumer demand for all flame occasions while paving the way towards a more value-driven model. At a global level, added value lighters accounted for 38% of the division's 2022 net sales, up two points versus last year.
We're well on track to reach our goal of 50% by 2025. In the U.S., EZ Reach maintained its steady drumbeat of distribution gains and incremental growth in the overall category. We successfully claimed additional share in the utility lighter market, gaining 4.6 points in value versus three years ago pre-pandemic. This positive trend indicates consumers' high demand and preference for BIC as their brand of choice for all flame occasions. Zooming in on Brazil, sales performance was boosted from healthy demand for decorated and utility lighters. The latter, which are now manufactured locally at our Manaus production facility, have successfully ramped up with a 21% CAGR for the last three years, surpassing pre-pandemic levels. Growth and market share gains in key regions were driven by distribution gains in both traditional and modern channels, efficient promotional activities, and a favorable price mix.
On to Blade Excellence. We outperformed our market in all key regions thanks to exceptional commercial execution and the success of the 3-to-5 blade and hybrid ranges, which is a strong proof point supporting our shift towards premiumization in the shaver category. Globally, our five-blade segment has been growing steadily, showing a 14.2% CAGR for the past five years. In the U.S., BIC is now the number 1 brand for women's disposables at one of our major customers, with a 36% share by value. This success comes from an overwhelming consumer preference for our premium shavers, for which a unique value for money positioning. Our new shaver in the Soleil range, the BIC Soleil Escape, quickly reached 2.7% of the women's disposable market, becoming the number one item in the overall disposable category in record time, a remarkable success for its launch year.
In Latin America, Brazil delivered a fifth straight year of share gains, outpacing the market by 1.2 points in value, driven by three blades in both men and female segments. In Europe, our 5-blade products had an especially strong showing with 30% sales growth and double-digit net sales growth driven by all segments. Further demonstrating how our CapEx investments are bearing fruit, our B2B business, BIC Blade Tech, successfully ramped up in 2022, contributing 15% towards total Blade Excellence net sales growth. With this in mind, let's look at an overview of our key financial figures for full year 2022. As I already mentioned, we grew net sales by 13.8% at constant currency, which translate to 11% on a comparable basis with strong momentum in all three divisions.
Our adjusted EBIT grew in absolute value by 11.4%, as we said it would, driven by our resilience to external headwinds and the decisive actions we've taken to offset the impact of inflation, namely volume increases, price adjustments, and further cost savings. Our EBIT margin was 14% compared to 15.3% last year, showing the expected impact of input cost inflation. Our adjusted EPS saw another year of outstanding growth, up 19.3%, which totaled EUR 5.12 for the year. Our net cash position at the end of December was strong at EUR 360 million, and we achieved our target of generating over EUR 200 million of free cash flow for the year. Chad will now take you through our financial performance in more detail.
Thanks, Gonzalve.
Sorry, Chad. In a little bit later. BIC's approach to sustainability is deeply rooted in the company's values and has been a cornerstone of day-to-day operations for nearly 70 years. In 2018, we reinforced our commitment to sustainable development by establishing Writing the Future, Together, a forward-looking global program underpinned by five major commitments. In 2022, these commitments were further strengthened by the company's greenhouse gas emission reduction targets, membership into the United Nations Global Compact, and the ESG share buyback program. We know that sustainability is a journey. Navigating this ever-evolving landscape takes time, as does making progress against our commitments. Everyone from our customers to our suppliers is on this journey with us, all part of our organized movement to make more sustainably-minded products that are better for the planet.
We are constantly looking to improve our standards and make a more positive impact. More information on our sustainability achievements will be shared in the coming weeks as we prepare to release our 2022 universal registration document. Moving now to shareholder remuneration. In line with our Horizon plan, capital allocation policy, the board will propose a EUR 2.56 per share ordinary dividend at the next annual general meeting for a payout ratio of 50%, which is an increase of 19% compared to 2021. In addition to the ordinary dividend, we will be executing a share buyback program of up to EUR 100 million throughout 2023. Such an increase underscores our strong belief in the company and our Horizon growth plan, and is testament to our commitment to shareholders.
As I've said, we're accelerating our path towards genuine long-term value creation for all of our stakeholders, of which I'm quite proud. With Horizon as our North Star, we're winning where it counts. Horizon's first pillar that fuels growth is our consumer-centric approach to innovation. Our investments and brand support in 2022 clearly delivered results. Let's consider BIC EZ Reach and its ingeniously simple design that consumers simply love. In 2022, this lighter again outperformed the market, up 1.1 points versus 2021. We're now well on track to reach our objective of 10% value share in 2025. At one of our major customers in the U.S., EZ Reach exceeded expectations, claiming 12.8% of the pocket lighter category and value for the year.
Joining Snoop Dogg and Martha Stewart in our new 2023 marketing campaign is the legendary Grammy Award-winning singer and songwriter Willie Nelson, an iconic talent chosen for his cross-generational appeal, who will take center stage as the campaign rolls out. We also have big plans to launch EZ Reach in Europe with a campaign featuring Snoop set to premiere in Q2. A second driver of our Horizon strategy for growth is continuing to up our game as an omni-channel specialist. On the e-commerce front, our enhanced digital capabilities boosted online sales with double-digit growth across all regions. We outperformed some of our top markets, including stationery and shavers in the U.S., growing 1.1 points and 1.4 points in value respectively, and in Europe, with the U.K. growing 2.9 points in value and Germany growing by 1 point in value.
Our in-store performance was robust and delivered market share and gains in most of our countries across categories, thanks to a combination of increased in-store visibility and distribution gains. Star performers included shavers in Brazil and France, where we gained 1.2 points and 1.9 points in value respectively, as well as utility lighters in the U.S., where we gained 1.9 points in value. The third driver is revenue growth management. RGM is a great example of how we double down on investments in operations by enhancing further our commercial capabilities throughout 2022 to fuel growth. We simplified the entire product portfolio and improved the in-store shopper experience throughout the year. We successfully reduced SKU count by almost 5,000 SKUs, representing an 11.7% reduction in complexity.
At the same time, in 2022, net sales per SKU climbed double digits in all three divisions, well above our target for the year. This proves that we're aligned and aligning with our main objective for consumers to find the right pack at the right price wherever they're shopping for our products, a winning formula. We also continue to drive positive mix impact, thanks to added value products and innovations with strong results this year in all three categories. Flame For Life was a star performer in the U.S., driven by trade ups to decorated pocket lighters. We saw a similar dynamic in France with our iconic 4-Color pen, a positive mix impact from trade ups to decorated options and the wood style body. Lastly, we're making smarter investments with our customers to drive business.
One example of our focus on promotional effectiveness is the expansion of our AI-powered test and learn capability with Eversight. In the U.S., we leveraged this technology in 2022 to refine our category-specific promotional guidelines. Sustainability is also a crucial aspect of our Horizon plan as we strive to contribute to a more sustainable future and ensure BIC's products have their rightful place. To this end, 2022 saw the launch of several innovative consumer-centric products centered on sustainability. Let me hand it over to Chad, who will take you through our financial results in more detail.
Thanks, Gonzalve. I'll now review our operational and consolidated financial results for the full year of 2022. Starting with our performance in Human Expression division. Net sales were EUR 838.8 million, up 16.9% at constant currencies. As expected, we saw strong performance with high single to double-digit growth across Europe, North America, India, and particularly Latin America. Our teams delivered solid commercial execution, notably during back-to-school seasons in the Northern Hemisphere. This enabled us to outperform key markets with relentless efforts on distribution gains in various channels, as well as efficient consumer-driven promotions. As expected, back-to-school season in Brazil, sell-in and sell-out was solid with a flawless program implementation, where coloring was the main contributor.
In South Africa, net sales grew double digits as we experienced the most successful back to school for the country in the last six years. Capitalizing on our value propositioning, net sales growth came not only from core historical products, but also from value-added segments like gel and creative ranges like Intensity, a proof point of consumer trust in all BIC products. adjusted EBIT was EUR 25.4 million, with a 3.0% margin compared to 5.4% last year. The decrease was driven by input cost inflation as well as 2022 acquisitions and investments in brand support as expected. This was partially offset by net sales, operating leverage, favorable pricing, and favorable fixed cost absorption.
Turning to our Flame for Life division, net sales were EUR 871.6 million, up 11.2% at constant currencies. Strong selling performance was driven by double-digit net sales growth in key countries through successful implementation of price increases, distribution gains, and impactful advertising campaigns. In the U.S., BIC EZ Reach Utility Pocket Lighter continued to be incremental to the overall category, driven by accelerated distribution in all channels of trade and impactful advertising campaigns. EZ Reach now accounts for almost 7% of our pocket lighter sales in the U.S., just over two years after its launch. As Gonzalve mentioned earlier, momentum will continue this year as EZ Reach will be launched in Europe with promising media plans.
In line with our strategy to lean towards a more value-driven model, added value lighters including decorated, utility, EZ Reach, and Jeep, accounted for 38% of the Flame For Life net sales, up two points versus last year. Adjusted EBIT was EUR 305.5 million, with a 35.0% margin compared to 37.6% in full year 2021. This was due to higher input cost inflation and an increase in brand support, driven by the BIC EZ Reach advertising campaign in the U.S. This was partially offset by net sales operating leverage, favorable pricing, and favorable fixed cost absorption.
Lastly, in Blade Excellence, net sales were EUR 497.0 million, up 14.6% at constant currencies, driven by added value segments, with strong results primarily in Europe, followed by Latin America and the U.S. Our five-blade segment has successfully grown steadily for the past five years, with a 14.2% CAGR between 2017 and 2022. In Europe, performance was driven by distribution gains in Eastern and Southern countries such as Romania, Poland, and Greece. We outperformed the U.S. 1-piece segment, driven by consumer preference for our value for money premium shavers, notably the Soleil range. Our new consumer-centric shaver, BIC Soleil Escape, reached 2.7% of the women's disposable market and was the number one item in the overall disposable category, a remarkable success for its launch year.
Net sales grew double digit in both Brazil and Mexico, driven by our three-blade offering and further distribution gains, a proof point of the success of our trade-up strategy in the region. As Gonzalve mentioned, BIC Blade Tech ramped up and contributed to 15% of the division's growth, lower than the first nine months of the year due to a less favorable comparison basis as we started to ship our first customers in Q4 of 2021. Adjusted EBIT for the division was EUR 66.6 million with a 13.4% margin in full year of 2022, compared to 14.3% last year, driven by higher input cost inflation. This was partially offset by net sales operating leverage, favorable pricing, and positive contribution from BIC Blade Tech B2B business.
Let's now review our consolidated results, starting with the fourth quarter of 2022 net sales. On an as-reported basis, net sales for Q4 of 2022 totaled EUR 526.7 million, up 20.6% versus last year. On a comparative basis, our net sales were up 9.1%. Currency fluctuations had a positive impact of 8.9 points, excluding the foreign exchange impact from Argentina. This was mainly due to the increase of the US dollar and the Brazilian real against the euro, respectively, +5.5 points and +1.6 points. The perimeter impact adjustment includes the acquisitions of Inkbox, Tattly, and AMI. Let's now turn to the full year of 2022 net sales results.
On an as-reported basis, net sales totaled EUR 2.234 billion, up 21.9% versus last year, up 11.0% on a comparative basis. We over-delivered on our full year 2022 guidance, grew 13.8% at constant currency for all the reasons I mentioned earlier. Currency fluctuations had a positive impact of 8.8 points, excluding the forex impact from Argentina, this was mainly due to the increase of the US dollar for +5.7 points and the Brazilian real for +1.3 points against the euro. Again, the impact adjustments include the acquisitions of Inkbox, Tattly, and AMI, which were slightly offset by the PIMACO divestiture. Let me now review the adjusted EBIT margin change versus the prior year for the fourth quarter.
Q4 gross profit margin decreased by 2.8 points to 46.2% compared to 49.0% in Q4 of 2021. Excluding recent acquisitions, the gross profit margin decreased by 2.9 points. This decrease was mainly driven by the negative impact from input cost inflation, partially offset by favorable pricing in ForEx in Q4 as previously communicated. Adjusted EBIT margin was 8.2% compared to 7.1% in Q4 of 2021, driven by 4.7 points favorable net sales leverage, partly offset by the gross margin decrease just explained previously in recent acquisitions. As we communicated in October, favorable ForEx and gross profit and lower distribution costs offset the increase in OpEx and brand support investments.
I'll now review the adjusted EBIT margin change versus prior year for the full year of 2022. Full year adjusted EBIT margin was 14.0%, down from 15.3% last year. Excluding 2022 acquisitions, the gross profit margin decreased by 2.8 points, mainly driven by input cost inflation as expected and unfavorable FX, mainly EUR USD hedging, partially offset by favorable fixed cost absorption and pricing. Adjusted EBIT was favorably impacted by 4.3 points from net sales operating leverage. Brand support was higher by 0.8 points and OpEx and other expenses was 1.3 points as we continue to invest to support our Horizon growth strategy, which is clearly showing results.
Examples of investments in brand support include EZ Reach and EasyRinse media plans in North America, sustainable development campaigns called REINVENT in France and Belgium, and our 4-Color digital campaign in Europe. All of these contributed to boost our sell-in and sell-out performance. On the OpEx front, on top of the investments we did for our innovation and insights capabilities that we made to develop some of the new products that I've just mentioned, we continue to enhance our RGM capabilities and sales strategy to deliver price realization and optimized product mix, which showed results, such as a trade-up to decorated lighters in the U.S. or new limited edition 4-Color pens. We also invested in our strategy and M&A capabilities to accelerate growth and expand outside our core categories.
Lastly, we've hedged 100% of our 2023 USD Forex needs at 1.08 USD versus a EUR. This next slide shows the impact of input cost inflation on gross profit for the full year of 2021 and 2022 in millions of euros. The total input cost inflation impact on full year adjusted EBIT was EUR 105 million. On this slide, you can see the key elements of the summarized P&L results. Adjusted EBIT for full year of 2022 was EUR 311.7 million compared to EUR 279.8 million last year, an increase of 11.4%.
As we look at non-recurring items in full year of 2022, we see mainly EUR 5.2 million of acquisition costs, Rocketbook earn-out, and Jeep price adjustment, as well as EUR three million related to impairment of our Ukraine operations. Full year of 2022 income before tax was EUR 290.6 million with a 28.1% tax rate compared to EUR 447.8 million in full year of 2022, which was due to the sale of our BIC Clichy headquarters in 2021. Full year of 2022 finance revenue decrease is mainly due to Argentina hyperinflation impact in Q4 2022.
Net income group share was EUR 208.9 million compared to EUR 314.2 million for full year of 2021. EPS group share was EUR 4.75 compared to EUR 7.02 in full year of 2021. Lastly, adjusted EPS group share saw a strong increase of 19.3% to reach EUR 5.12. On this slide, we see the main elements of working capital. Inventories increased by EUR 74.7 million compared to December of 2021, notably driven by EUR 45 million of input cost inflation. Trade and other receivables decreased by EUR 15.1 million as a result of efficient cash collection, as previously communicated. In 2022, we invested EUR 96 million in CapEx.
The greatest focus was on our growth CapEx, representing more than half of the investment. We invested 33% in Blade Excellence, notably related to new products such as our new launch of EasyRinse. This last slide summarizes the evolution of our net cash position between December of 2021 and December of 2022. Net cash from operating activities was EUR 300 million, including EUR 428 million in operating cash flow and EUR 128 million of impact from the growth in working capital and other. During full year of 2022, we invested EUR 73.8 million related to acquisitions, mainly Inkbox. Net cash was also impacted by investments of CapEx of EUR 96.3 million.
The dividend paid in June amounted to EUR 94.7 million. We bought back EUR 54.5 million worth of shares. Our net cash position at the end of December 2022 was EUR 359.9 million. This ends the review of our full year 2022 consolidated results. Now let me give the floor back to Gonzalve.
Thanks, Chad. Let's turn to the main growth drivers we see for 2023. We expect all of our divisions and key regions to deliver growth this year as we lean into our momentum from last year. We are operating amidst the uncertainty of a macroeconomic environment that harbors potentials for recessionary pressures. We will continue to sharpen our focus on consumer-centric innovation and drive commercial excellence even further. In Human Expression, developing markets that grew in the double digits during 2022 will continue to recover successfully above their pre-pandemic levels and contribute to the growth of the division. In Europe and North America, we'll be working to ride the momentum from our 2022 market share gains. We will lean even more into our RGM capability by further simplifying our lineup and drive greater value by increasing net sales per SKU.
Of course, we are aiming to continue double-digit net sales growth in e-commerce. The performance of our Flame For Life division should come from continuing along our value-driven path established in our Horizon goals. In addition to our successful core products, we will continue our portfolio premiumization across our regions. In the U.S., Canada and Brazil, they should enjoy tailwinds from our 2022 market share gains. In Blade Excellence, we will make the most of the momentum from market share gains on added value segments such as the 3-5 blades and hybrids, as well as capitalize on our innovative consumer-centric launches, which I'll now cover. To ensure our innovation funnels deliver a strong flow of exciting new products, we remain focused on boosting our global innovation pipeline. This year, we have four major new product rollouts.
Ecolutions is our full line of eco-friendly stationery products made of at least 50% recycled materials in 100% recycled and recycled packaging. At the heart of the collection is the new BIC Ecolutions gel pen made of 78% ocean-bound plastic. With its launch, we're entering the number one writing segment in the U.S., bringing a truly unique offering to the market. This is an important step because we know that two-thirds of millennial shoppers prefer to buy from sustainable brands, and a similar number are interested in purchasing sustainable writing instruments. The second is the break-resistant mechanical pencil, which began as a soft launch in Q4 of last year and will be rolled out this year.
Based on a key consumer insight of an unmet need, we created a mechanical pencil that is 75% stronger than the leading U.S. competitor, reinforced by a mechanism that adjusts to pressure applied when writing. Sell-in results from the fourth quarter of last year's soft launch in the U.S. showed promising results already. In 2023, the BIC Soleil Escape line, featuring a scented handle that delivers a sense of luxury at an accessible price point, will expand in the U.S. with a wider palette of on-trend fragrances. Meanwhile, the original offering that started the scent razor craze, lavender and eucalyptus, is now ready to roll out globally. Now I'd like to introduce the breakout innovation for 2023. 92% of people who shave experience clogged razors, making clogging a universal frustration.
After nearly five years of development, BIC has solved the clog once and for all with the new BIC EasyRinse razor, a first-of-its-kind razor with a reverse blade design and anti-clogging technology protected by 21 patents. By quite literally reversing our thinking and attaching the blades to the opposite side of the armature, we were able to double the amount of skin contact points using fewer blades, as well as spread the blades further apart to eliminate clogs for a true high-quality shave. Consumer testing showed that 94% of testers loved its rinsability with purchase intent off the charts. An online pre-launch in the fourth quarter in the U.S. already showed promising results with an average star rating of 4.7-5 stars.
BIC EasyRinse will gradually be hitting shelves in stores in North America throughout 2023, and we're set to roll the razor out globally in 2024, with Europe as our next big win region. We're proud to continue our legacy of innovation with BIC EasyRinse, our latest design milestone that redefines razors for a new generation. Before concluding with our guidance for 2023, let me take you through our market assumptions for this year, which are baked into our outlooks. These are based on Euromonitor and internal estimates. Taking Europe first, we expect to see softer market trends in lighters and shavers versus the prior year, and a flat to low single-digit increase in stationery. In North America, the stationery market should see a low to mid-single digit decrease following a flat trend last year.
In lighter, we expect the market to decrease low to mid-single digits like last year, following a strong performance in 2021, and the disposable shaver market will continue to be challenging with inflation driving trade down. In Latin America, we expect an overall continued increase in both stationery and shavers, with a continued rebound anticipated in Brazil and Mexico, notably in stationery. Lighters should decrease low to mid-single digit following a flat trend last year. Lastly, we expect a continued steady upward trend in India as of 2022, following a large COVID drop in 2020 and 2021. I'd now like to share the main drivers that will underpin our financial performance this year.
We expect organic growth to be driven by pricing, mix, and promotions as we continue to deliver on our revenue growth management goals. Growth will also come from higher volumes, added value, and new products, as well as continued market share gains building on 2022 momentum. Net sales at constant currencies should grow between 5% and 7% in line with our Horizon trajectory. The gross profit level, raw materials, excuse me, and import freight costs will remain at very high levels, although a lesser extent than 2022. We aim to mitigate this impact on our P&L as much as possible as we did in 2022, and we have action plans. On top of benefiting from favorable forex impact, we will compensate for these headwinds through price and favorable mix, increased volumes, as well as savings from further procurement initiatives and manufacturing efficiencies.
As we choose to invest in long-term growth and innovation in line with our Horizon ambition, our adjusted EBIT will be impacted with increased brand support, R&D, and investments in operations such as procurement and M&A. More specifically, brand support investments will include continued impactful advertising campaigns such as EZ Reach and Soleil Escape in the U.S. and Europe and the EZ Reach launch in stores in the U.S. Regarding our operating investments, we will continue to invest in innovation to increase the pace of delivery for new products and create more added value offerings to improve mix. We'll also invest in new technologies and new customers for our BIC Blade Tech business.
We'll double down on our commercial capabilities to further improve shelf presence and enhance revenue growth management with more trade and promotion management, including the expansion of our AI-powered test and learn capability with Eversight that I mentioned earlier. Lastly, we will invest in procurement to continue to drive direct and indirect efficiencies as well as in M&A to accelerate growth and expand outside our core categories. We'll continue to focus on strong cash flow generation through working capital improvements with adjusted EBIT margin expansion contributing. CapEx is expected to be between EUR 110 million and EUR 120 million in line with our commitment to invest in maintaining our manufacturing excellence. Full year 2023 net sales are expected to grow between 5% and 7% at constant currencies driven by price mix and volumes.
We expect to improve adjusted EBIT and adjusted EBIT margin driven by gross profit margin growth, partially offset by continued investments in our operations and brand support aimed at driving our Horizon ambition to delivering long-term profitable growth. Free cash flow is expected to be above EUR 200 million in 2023 for the fifth year in a row. Before we do, I'd like to leave you with three words that I feel resonate strongly with BIC's performance in 2022. The first is trust. As households around the world are hit by inflation and energy costs, consumers in every corner of the globe are turning to our brands for the great quality and great value that we deliver. In turn, this trust gives us confidence that we're making the right decisions. The second is momentum.
The tangible results from our Horizon plan are a tremendous source of energy that moved us forward in 2022 and will continue to drive our sustainable growth in 2023. The third is agility. The further we move forward with Horizon, focusing on consumer centricity and innovation, the better our business can pivot, adjusting as needed to weather continued headwinds we know we will face. Thank you very much. I'll now open the floor to questions.
Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question from line Othman, Rachel from Bank of America. The line is open now. Please go ahead.
Thank you. Good morning, Gonzalve, Chad, and Michelle. Thanks for taking my questions. I have a few. First, on the fourth quarter EBIT margin, you expected a tailwind of 100 basis points from fixed cost absorption and no impact from OpEx, but they both negatively impacted your margin by 40 and 130 basis points respectively. Can you explain what happened here? Specifically on lighters, the margin came in below 30% for the first time since the first quarter of 2020. Is the decline attributable to a greater sales exposure to Europe, or is there anything else you'd like to point out besides the raw materials inflation?
On your growth outlook for 2023, you expect to grow 5%-7% at constant currency while you portray a low to mid-single-digit decline in value for your categories across Europe and North America. Can you expand more on the drivers of the market decline, declines in the two regions? Do you expect to grow your categories at the same pace? How should we think about the contribution of Blade Tech to your 2023 performance? My last question is on inventories. Can you comment on the level of inventory at your retailers across your three divisions? In stationery, do you expect the sell-in to happen early this year as in 2022? Thank you.
Hi, Othman. Thanks for the questions. Let me start with the first two. We'll make sure we try to get them all. You might have to repeat a few of them. The first one you talked about was the Q4 margin.
In terms of what happened there, you know, Q4, when we look at the margin, the decrease in full, was really driven by the input cost inflation, right? As we had talked about. You had talked about the fixed cost absorption and OpEx. There's two different things, right? The fixed cost absorption was really kind of offset also by the benefit of the input cost inflation not being as much as we thought. Net-net, really 0 impact from the two there. In regards to what we had said about OpEx, we had talked about OpEx and brand support and FX, all of them kind of being neutral to last year. When you look at all of them combined, as we said in October, they, I think they actually had a slight positive impact.
It was in line with what we had said in October. In regards to margins for lighter, as you know, all the categories were impacted by input cost inflation. One of the things that I like to remind people of, and I know you know the math, but I just like to remind people, is that for every EUR of input cost inflation, you would need almost two EUR of price to maintain the margin level. That 1 EUR of input cost inflation has a, you know, has a massive impact. The EUR 100 million, for example, on our full year sales for 2021, has 580 basis points of impact on gross profit if nothing else was done. Naturally, the percentages are gonna be impacted by the cost inflation that we had.
Moving on to your next question about the growth and why how we have the growth in declining markets, and BIC Blade Tech contribution, Ghazal.
Thanks, Chad. Good morning, Othman, and thanks for your question. Let me tackle your question in reverse because it's just easier for me to think about it that way. As to market, listen, we're following very closely both consumption trends and market trends in market on a month-by-month basis. We're seeing a lot of variability across the globe, but signs that show us that the assumptions that we use to build our plans are the right ones. In the US and Europe, we see a continuation of the long-term downward market trends that we've talked about many times, driven by the same things that they have. What I take great comfort in, though, are the market share gains that we make in the face of those market trends. They show a number of things.
That BIC consumers continue to trust the brand, love the products, and wanna trade up or sometimes down, and that's the great thing about having the broad ranges that we have. In some cases, I talked about, you know, consumers trading up in the 4-Color ranges, going up and up and up into the limited editions. In other cases, we know that consumers have either traded across pack counts, which I think you're gonna continue to see, or down to lower price products, but that's the beauty of BIC in those segments that we have, Cristal and Round Stic. You can go up or you can go down. I think you'll continue to see us over-delivering, for example, in coloring and marking in the face of that.
In Latin America, in lighter, after a flat year, I think they're gonna go a little bit negative. Could be a little bit better than that, but there's a lot of noise out there in the world around recessionary pressures, and we wanna be mindful of how we plan so that we're resilient as we have been in the last couple of years. BIC Blade Tech this year, more than doubled its business, and I think it's off to a really good start because we have less than two years of history behind us in BIC Blade Tech and really delivering above the plan that we had for ourselves. It's gonna take some investment, but I've got a lot of really promising leads on further customers. We've got a couple of signed LOIs.
We've got some new things to announce, probably this quarter with some partnerships, with companies making even more innovative things, and we're leaning into those, future products. I'm really excited by what BIC Blade Tech delivers to our total growth story.
Your last question, Othman, was about the inventory customer levels.
Yes.
The question, what you're asking about that?
Yes, it was, it was about the level of your inventories at your retailers across the 3 divisions, and also about the stationery selling, the timing.
Okay. I mean, we track inventory levels at our customers. We of course, don't disclose it because from country to country and market to market, there's a lot of variability. What's really important, and I think you I've been saying this for a number of years. What's important is to make sure that the inventory is there so that it can be bought by the consumer. In the 2020, 2021, and 2022, man, was that tested, right? Supply chain disruption, raw material shortages, all sorts of challenges. BIC delivered and made sure that we were in full and in store as much as is possible, and I think it helped us really gain a lot of share, for example, last year. We're prepared to do that for next year as well.
Now to your very good question around timing of sell-in across quarters, we still believe that Q2 will be strong. There'd be a little bit less in Q1 than there was last year, and that's gonna be reflected a little bit in the first quarter. I see a very strong back to school for us coming this year. On inventory more broadly, Chad?
I think that you answered it at customer levels and I think that was your full comment.
We're good.
Yep.
Yes. Did we answer all your questions, Othman? I'm sorry 'cause it was hard to... There was many questions baked into two.
I think yes, you did.
Thank you.
Thanks.
Thank you.
Thank you. We will take the next question from line, Christophe Chaput from Oddo. The line is open now. Please go ahead.
Yes. Good morning to you all. Christophe Chaput from Oddo. I got three questions, please. The first one is related to guidance on the top line, so 5%-7%. Could we know how much of that is related to price? Is those price increase are already implemented or you are still going to implement them, let's say during the first semester or the second semester? The second question is on the total input cost inflation. It weighted EUR 105 million in 2022. If you consider the spot price and the aging you probably have, what should we expect for 2023?
I see that it should still be negative, it's probably more negative in H1 and positive in H2. Just to have granularity on that topic. The last one is on personal expense. What could be the impact on your P&L from the salary increase in 2023? Thank you very much.
Gonzalve, you wanna start with top line?
Yeah. Christophe, as you know, we don't. Yeah. This year? Huh?
In terms of price.
Yeah. we're gonna grow 5%-7%, and there will be a mix of higher volumes, price, promotion and the things that frankly drove the great year that we had this year. we.
Let me add in, kinda, Gonzalve. One thing that we'll say is we're not giving specific guidance on price. We'll say that price will contribute in 2023. We can't really talk about the specifics as we're still negotiating with customers. It was part of your question in terms of when they'll be implemented. A lot of them are already locked in. We're still closing some of them out.
Yeah.
Mix will contribute more than last year. Still as we refine our RGM processes. Volumes will contribute not to the same extent as in 2022, because as we said, you know, it's almost half price, half volume in 2022. Volumes will, to a lesser extent, but still be positive in 2023. The next question, Christophe, was around total input cost inflation. What would 2023 look like? For sure you got it spot on. You know, it's not going to be Input cost inflation's not going away, but it'll be less negative than it was in 2022. As we get further on in the year, we'll give more clarity on that, probably in Q1, and specifically show you some of the phasing of that.
To your point, you should expect to see, you know, the impacts in the first half of the year to be stronger and easing on the second half of the year, just as we're seeing, you know, sea freight and certain other elements of costs starting to ease a little bit in the second half of 2022. Your final question on personal expenses impact on 2023. One thing that we'll say is our talent is super important to us. What we are doing is you can see that, you know, other major companies talk about increases of, you know, 5%-10% is a range that they give, and we're within that range.
One thing that we'll say is we're making sure that we're being very competitive with our increases to make sure that we do retain talent. All of those impacts are baked into our expectation of increasing EBIT margin in 2023.
Thank you.
We will take the next question from line, Marie-Line Fort from Societe Generale. The line is open now. Please go ahead.
Hi. Good morning. I've got three questions. First one is about Inkbox performance in 2022. According to my estimate, the company made an operating loss of EUR 30 million. Can you confirm this? Do you maintain your target that Inkbox will be accretive in 2024? Can you elaborate a bit on the levels? The second question is about the Stationery division on its own. What is your plan to stop the continuing decline of the margins? The last question is about M&A. What is the pipeline? Have you got some targets in the field? Can we expect something in 2023? Thank you very much.
You wanna do it, Chris?
No, I'll, I can do Inkbox.
Yeah.
Bonjour, Marie. Thank you for your questions. When we acquired Inkbox, we said that it would contribute one to two points last year for the total company. It contributed one. What gives me a lot of excitement about what it's gonna do this year is the earlier than anticipated entry into retail in the U.S. It's a new way for us to bring the product not only physically to the consumer, but to get much higher levels of awareness of the product segment and category to the broader population. In addition to the direct-to-consumer website that you all know, and hopefully have used, you'll now be able to go into a select number of U.S. stores in the second quarter and buy tattoos there and then for use.
What we said is in 2024 it would be break even. It would start being positive at an EBIT margin in 2025. We're still on track to deliver that. The teams have the plans in place to deliver that, both from a growth perspective as well as from an operating perspective. I'm really excited about what Inkbox does in addition to the other businesses that we've bought. Chad, do you wanna talk about stationery?
In terms of stationery, we have several things going on, Mary Jane. Number one is our performance. You know, in Cello, we actually just did a relaunch of the Butterflow, which is part of our brand support that we had in stationery in Q4 of this year. Cello's had phenomenal growth. The team continues, and we've talked about this in the past, that it's been a drain on the stationery margin. The team out there is doing a fabulous job of really turning that business around, we continue to see year-after-year improvement in margin there. That's one element to it. The second element is, as Inkbox continues to get towards that break-even level, as you said, we'll obviously increase our stationery margins.
All the work that we're doing on RGM is gonna have a significant impact in 2023 from what we're seeing from just some of the core business stationery margins. We expect to see continual improvement on stationery margins from there. From a M&A pipeline.
From an M&A pipeline perspective, I'm pleased with 2022. We did Inkbox, Tattly and AMI. If you wanna reverse and, you know, think about the funnel, that's three deals completed. Probably more than about double that is the number of active discussions that we had that ended in us seeking the business. We probably analyzed... Yeah. We probably analyzed over 100 different targets during the year. That funnel, I think, is strong. When I look at what we've got active, no, I can't tell you more than that, I think this would be absolutely the inappropriate time to tell you something very specific. I'm pleased. I see a good mix across core more and further afield.
I see opportunities with geographic dispersion, and I see them being, good balance of growth, tech, and capability for our business going forward, always in support of our Horizon growth ambitions.
Thank you very much.
Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the next question from line Mourad Lahmidi from BNP. The line is open now. Please go ahead.
Yes. Good morning. I have a question on your brand support in 2023. Would you say that this year your brand support effort will be more intense in EUR terms than in 2022 or relatively similar?
we'll say, you know, we've talked a lot about all the innovation that we've been doing. We're gonna lose that line.
Mourad, can you go on mute 'cause we can hear you typing? Sorry.
Sorry about that.
Yeah, we've talked about brand support in 2022, and 2023 is gonna be another year that we continue to support our brands, right? We have Easy Reach going out into Europe. As Gonzalve spoke about, we are launching EasyRinse in retail in the U.S. We have some coloring things in stationery. We do expect to continue brand support in a strong way. Versus 2022, the value will not decrease from a euro perspective. We'll continue to invest more as we launch more and more innovation.
Okay, thank you. In terms of the OpEx, actually, I have the same question. The intensity of OpEx deployment versus 2022.
Yep. You know, I'll start back with where we talked about gross margins will increase, and we said that will be tempered by the investment in our operations, right? Both brand support and OpEx. When you think about OpEx in 2023, we're gonna continue investing in our global supply chain as we work on our integrated business processes, and we talk about our working capital efficiency, and really that's gonna help us drive our inventory levels. Investment in our IT. We're investing in innovation. All the innovation and insights that we talk about as part of our operating expense. Our commercial capabilities, you can see the results that RGM is delivering.
We're gonna continue to invest in that so we can get more and more from RGM output, and we'll continue to invest in strategy and M&A. Many things which are all driving this Horizon growth, which drove the 13.8% at constant currencies in 2022. It's driven by, you know, both brand support and OpEx. Continuing to support those is giving us this outpaced growth and will give us this increase in gross profit next year, even with the input cost inflation that we're gonna have.
Okay. Thank you. I finally have one following up on the raw material and sea freight costs. I was actually surprised to see that it's gonna be a headwind in 2023 as we all see some of the input costs easing on a spot base. Is it the case that some of these costs are still baked in your inventories, so we will not see any reversal before the second half?
Well, for sure, yeah. We always talk about when something's in our inventory in, it takes about six months, is the rough number we give people, before it hits the P&L. You will be seeing in the first half of the year, input costs and stuff that's in our inventory now, that input cost inflation that flows through next year. Let's be clear, the, you know, inflation is still continuing, so there's gonna continue to be impacts from raw material throughout the year, both in our lighter division and in shaver in particular. I think in stationery it won't be as much, so that's some of the reason we'll see some of the stationery margin improvement. We're gonna still see raw material inflation across our lighter and our shaver business.
Okay, thank you very much.
Yep.
Thank you. We will take the last question from line, Cédric Rossi from Bryan Garnier. The line is open now. Please go ahead.
Yes, good morning, Gonzalve and Chad. I have two questions. The first one is to bounce back on Mourad's question regarding freight cost. I was also surprised to hear that you were expecting sea freight cost to be a headwind because it differs a little bit from what we are hearing from other consumer groups. I was curious to have your view on that. The second one is regarding the premiumization strategy in shavers. It works obviously, but I recall that during the past crisis in 2008, 2009, you were gaining market shares thanks to the value for money positioning and the positive price gap versus your competition.
How do you maintain this price gap, and how do you deal with it and to make sure that you are not perceived as being too expensive for your customers? The last one on shavers. You were kind enough to give the share of value-added products in lighters. Could you also tell what is the share for shavers? Thank you.
Let me take your first question, which is the freight cost. As I was just explaining to Mourad, the sea freight cost that we see in the second half of 2022, as the spots are starting to drop, realize that we have those costs in our numbers in the second half. The first half, when you think about a comp basis, Q1 or first half of 2022, the costs increased throughout the year, they started to decrease. We're going to see some of that impact from the second half in our first half. As we go into the second half of the year, you're right, we will start to see easing of that.
Mm-hmm.
Market share. I'll hand that over to Gonzalve.
I'll do it in reverse. It's 63% in shave, the percentage of added value. Thank you for your question on premiumization and relative pricing positioning on value versus the set, which is a great question. It's two things that happen at the same time, but they can kind of be distinct. What I mean by that is, when we talk about premiumization, you're talking about products that retail at a higher price for greater innovation. It doesn't mean it's just price increase and going up the ladder kind of arbitrarily to the consumer. We still absolutely must remain that value and valued brand, right? That double equation is so important. The consumers love the brand, they love the promise, they love the shave, and they love the price of the shave as well.
It's valued and value. If I was to take all the shave products and put them on a kind of slope for you would see that there's a tremendous range, both total market but also for BIC. That's where it allows us to make sure that we stay relatively constant in our facial price difference versus our major competitors. To your point, we don't wanna get, quote-unquote, "too expensive." When we're delivering amazing breakthrough innovation, like on EasyRinse, you absolutely want to capture the full value of that innovation relative to the total set. Does that make sense?
Yeah, perfectly.
Awesome.
Thank you, Gonzalve.
Thank you. There appears no further questions. There's no further question at this time. I'll hand it back over to your host to conclude today's conference. Thank you.
Thank you, everyone. As usual, we will be remaining at your disposal to answer any follow-up questions, so do not hesitate. A short reminder on our next publication. The Q1 2023 results will be released on April 25th after market close. Thanks again, and have a great day.
Thank you.
Thank you.
Thank you for joining today's call. You may now disconnect.