Hello and welcome to the Vicat full-year results 2023 call. Please note this conference is being recorded, and for the duration of the call your lines will be on listen only. However, you'll have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now hand you over to your host, Mr. Guy Sidos, Chairman and CEO of Vicat Group, joined by Mr. Hugues Chomel, Deputy CEO and CFO of Vicat Group, to begin today's conference. Thank you.
Thank you, François. Welcome to the Vicat Group's 2023 annual results presentation meeting. I'm Guy Sidos, Chairman and CEO of the Vicat Group. I'd like to introduce Hugues Chomel, Deputy CEO and the Group Chief Financial Officer, and Pierre Pedrosa, who has joined us as the Director of Financial Communications and Investor Relations. Page two contains a preliminary disclaimer. The purpose of this document is to draw your attention to the fact that the information presented here for the 2024 financial year is an assessment of expected trends in the group's various markets and should, under no circumstances, be considered as a forecast. On page three now, our presentation will focus on five points. I'd like to start by reviewing the key events of 2023 and then come back to the key points of our development model.
Hugues Chomel will then analyze the group's overall and regional financial performance, as well as the main balance sheet and cash flow items. I will then talk about our climate action plan before concluding with a look at the expected trends for the current financial year. Please switch to page four and let's start with the highlights of the year on slide five. The success of 2023 and the prospects it opens up confirm the relevance of the Vicat Group's development model. It was a year in which our initial ambitions tend to fit in, with organic growth of nearly +20%, benefiting from the contribution of all our regions. This growth is a result of the commercial and industrial efficiency of all our teams in our various markets. I would like to congratulate them once again on their commitment and their contribution to this fine 2023 performance.
This dynamism is reflected in a record EBITDA of EUR 740 million for the year, boosted in particular by a strong performance in the U.S., and more on this later. The group is also continuing to reduce its debt with a financial leverage of 1.92 x at the end of 2023. Finally, the group is continuing to implement its decarbonization roadmap. Onto slide six now. 2023 was a remarkable year. Sales almost reached EUR 4 billion, and that's risen by almost 10% a year over the last five years. EBITDA rose by almost 30% to EUR 740 million, with annual growth of 9% over the last few years. Operating margin continues to rise, reaching 8% this year. Lastly, financial leverage fell below two times, the lowest level in recent years. I'd like to come back on slide seven to the fundamentals of the Vicat Group's development model.
Focused on cement, our core business, Vicat's resilience lies in the group's geographical diversification: 12 countries by 2023. Countries where we produce locally for local needs using local labor. On the right are the components of our geographical mix, which breaks down sales and EBITDA between developed markets, which generate cash, and emerging markets, which concentrate growth opportunities. The second reason for our resilience comes from the regular modernization of our equipment. In 2023, the new Ragland kiln in the U.S. will strengthen Vicat's significant presence in the U.S. by doubling our production capacity and reducing the plant's production cost and carbon footprint, with a target reduction of 30%. In 2024, a plant in Rufisque, Senegal, will follow suit. The third reason for this resilience comes from the effectiveness of our applied research.
Innovation is at the very heart of Vicat's DNA: the launch of DECA, a low-carbon concrete trench. The marketing of Carat, a cement with a negative carbon footprint. Lithosys, a revolutionary 3D concrete printing solution. The Vicat'O floor washing range, etc. These are examples of practical developments in research that concern not only products but also manufacturing processes, as demonstrated by the development of clay activation technologies for the Argilor project or the incorporation of raw clay in collaboration with the startup Matterup or our partnership with the startup Carbon8 to recycle dust to produce high-performance aggregates. The final reason for this resilience is the most important: the commitment of our teams. Across four continents, our people have shown exceptional dedication and skills, enabling us to improve our industrial operating parameters and the efficiency of our logistics and sales in 2023.
This commitment mirrors the family commitment to a long-term industrial strategy. And in 2023, a representative of the eighth generation of the Vicat family took up an operational role in the company. Finally, on slide eight, I'd like to present an analysis of our investment cycle over the last 10 years. There is a clear first phase between 2013 and 2018 with stable investment and substantial cash generation, then from 2019 onward, we chose to accelerate our investments at a time when financing conditions were very advantageous. We acquired Ciplan in Brazil and began investing in Ragland and Senegal. We are already seeing the fruits of these investments with a marked improvement in our cash flow generation. I will now hand over to Hugues Chomel for a more in-depth analysis of our financial performance.
Thank you, Mr. Chairman and CEO. Let me start on slide 10 with the key figures from our income statements. Strong sales growth in each of our markets has borne fruit with a recurring EBIT up organically 68%. The EBIT margin rate reached 11%, up 3.2%, but at a level that remains below the pre-crisis level that we aim to restore. Net profit group share rose by almost 85% to EUR 258 million. Slide 11 shows our sales by region. All the regions are growing organically in 2023, particularly Americas, which is up by nearly 16% to account for a quarter of group sales. The United States is the main driver of our performance, accounting for 18% of turnover. Let's move on to the next slide, slide 12, which shows the main drivers of EBITDA growth between 2022 and 2023.
The main variation is due to inflation, which is reflected in our production costs and which we have managed to pass on in our prices in our various markets. The growth in volumes and the improvement in group industrial performance are making a positive contribution to EBITDA. To note, an unfavorable currency effect of EUR 64 million essentially related to the Mediterranean zone. Slide 13 shows the evolution of our main cost items over the last five years in relation to our sales. This shows the considerable impact of inflation. On the left of the slide, you can see the trend in variable energy costs, which, although down over the last six months, are still well above pre-crisis levels. At EUR 656 million, these costs represent 16.7% of our sales, almost 3 percentage points higher than the level of 2021.
On the right, you can see the evolution of fixed costs linked to personnel and maintenance, which have also increased by more than a third over the last five years. I'd now like to turn to slide 14 to an analysis by region, starting with France. In France, volumes of cement, concrete, and aggregates fell as a result of a slowdown in the residential sector. In terms of prices, the increase in 2022 and 2023 has offset the cumulative rise in energy costs and underlying inflation. At the same time, the ramping up of a major rail infrastructure project in France will help to sustain business over the coming years and act as a buffer against the weakness of the residential sector. Let's turn now to the Europe region on slide 15 with a review of our performance in Switzerland.
In the country, we saw a further decline in volumes due to the weakness of residential and infrastructure markets. Here too, in cement, positive price trends offset the cumulative inflation in costs, particularly energy. In Italy, EBITDA rose thanks to price increases despite stable volumes and higher input energy costs. In the United States on slide 16, cement volumes continue to rise in the second half of the year thanks to the ramp-up of the Ragland kiln, which reached nominal capacity in the fourth quarter. Demand in the southeast of the United States remains strong, thanks in particular to the local impact of infrastructure and reindustrialization programs. The opening of new rail terminals in Georgia and Tennessee has increased the catchment area and supported Ragland industrial expansion.
This strong growth in volumes in the southeast more than offset the fall in volumes in California due to unfavorable weather conditions in the first half of the year. Prices remain strong in both regions, with further rises recorded in late summer. In Brazil, against a backdrop of generally resilient macroeconomic conditions in 2023, the cement business saw an erosion in volumes due to the slowdown in demand. Average prices rose over the year. EBITDA reached a record level in 2023, with a marked increase thanks to good control of production costs, a sharp acceleration in the use of alternative fuel, and the integration of activated clays. On slide 17, we have highlighted our activities in the United States, where we are leveraging our presence in two specific areas: the southeast and California, where we serve the Los Angeles market.
In this zone, 2023 was affected by very unfavorable weather conditions in the first half of the year, which should contribute to a more favorable base effect for 2024 if the weather is milder. The Ragland plant serves four states: Alabama, Georgia including the Atlanta metropolitan area, North Carolina, and now Tennessee from new rail terminals. The plant, which has a capacity of two million tons, recorded 68% growth in sales volumes and helped generate EBITDA of EUR 151 million in the United States, more than 20% of the group's EBITDA. In 2024, the Ragland plant will benefit from a full-year volume effect. The cement business in India, shown on slide 18, picked up in the second half of the year, with volumes increasing over the year as a whole. Indeed, the market remains dynamic, underpinned by ongoing infrastructure development efforts.
Although sales prices were down slightly over the year due to the competitive environment, the fall in production costs in the second half enabled us to regain competitiveness. In Kazakhstan, business picked up in the second half thanks to the securing of a fleet of additional wagons. Prices fell slightly over the period in a more competitive environment. On slide 19, let's start with Turkey. Despite a macroeconomic context marked by hyperinflation, the cement business in Turkey enjoyed solid volume growth throughout the year. EBITDA rose significantly thanks to cost control over the period, particularly in maintenance and the increased use of alternative fuels. The waste heat recovery system commissioned at the Baştaş plant during the fourth quarter will contribute to a significant improvement in cash costs going forward. In Egypt, business was marked by a sluggish domestic market, with volumes down slightly over the year.
Against this backdrop, the group has seized export opportunity in West Africa and the Mediterranean. Benefiting from the capacity regulation agreement, domestic prices have risen sharply, and EBITDA has risen above the threshold of profitability in 2023. Finally, let's move on slide 20 to the Africa region. The domestic market remains dynamic, underpinned by dynamic residential demand and infrastructure projects. Average prices are also rising. Cement production is expected to remain constrained until the new kiln is commissioned, with startups scheduled for late 2024. Aggregate business in Senegal grew in 2023, benefiting from positive price and volume effects. EBITDA was stable. The cement business in Mali is benefiting from the strong recovery in the market following the political crisis, which significantly reduced deliveries in 2022. In Mauritania, sales rose and EBITDA grew strongly. On slide 21, we set out the details of our investment in Senegal.
The group has launched a EUR 260 million investment plan to build a new two million tons per year kiln line to achieve the following objectives: substitute locally produced clinker for imported clinker, improve the industrial performance of all our operations in Senegal, reduce our CO2 emissions footprint, in particular by making extensive use of alternative fuels. Commissioning is scheduled for late 2024, with contributions expected in 2025. We have a ROIC target of 18% on this project, which is mainly linked to an improvement in production costs.
Slide 23 shows the improvement in free cash flow generation. In 2023, our capital expenditures were EUR 329 million compared with EUR 422 million in 2022. This reduction, compared with our initial targets of EUR 350 million, is linked to certain capital expenditures on Kiln 6 in Senegal, which was not disbursed by the end of 2023 and will be disbursed early in 2024.
The Group remains committed to its climate investment target of EUR 800 million in 10 years between 2021 and 2030. Free cash flow was EUR 295 million, showing a marked improvement in 2022. Cash conversion to EBITDA is around 40% this year. Slide 24 shows our debt situation at the end of 2023. The Group's net debt stood at EUR 1.4 billion, giving a leverage ratio of 1.9 x, a marked reduction from last year's figures. Our debt has a well-balanced maturity profile over time, with an average maturity of over five years. The average interest rate is less than 4% across all currencies before hedging. Vicat has good liquidity, with EUR 680 million in available undrawn credit lines renewed at the end of 2023. On slide 25, you have an overview of our debt reduction trajectory.
Our management strategy, based on EBITDA growth, tight control of working capital requirements, and disciplined investment, will enable us to further reduce the group net debt. The group has therefore set itself a target of reducing its leverage ratio to below 1.3 x by the end of 2025. With this perspective, I'll hand back to Mr. Sidos.
Thank you, Hugues. Let's switch to slide 27 with an update on our progress on the climate plan. The group's climate performance has improved in 2023 on all indicators in all the group's geographical zones, with a notable improvement in Brazil, which has reduced its clinker factor and significantly increased its use of alternative fuels. In 2023, the net emissions pattern of cement fell by 3.3% for the group and by 5.5% in Europe.
For the record, the Vicat Group's 2030 CO2 target is 497 kg net per ton of cement and 430 kg net per ton of cement for Europe. This target is based on current proven technologies and does not include breakthrough technologies such as CO2 capture and storage or usage. I'm launching the "From Low Carbon to Zero Carbon" initiative in 2024. It means that in addition to pursuing its policy of modernizing and de-fossilizing the industrial process and bringing sophisticated composite cements to market, the group is looking into two ultimate decarbonation projects involving the capture of CO2 for storage or usage in the manufacture of synthetic fuels at the Montalieu plant in France and the Lebec plant in California. These projects require substantial public funding to get off the ground. Finally, our CDP A-rating was renewed this month.
On slide 28 now, we show the group's stock of European ETS CO2 allowances. It will reach 4.7 million tons at the end of 2023. This will enable us to meet our compliance needs in France and Switzerland until 2032. This stock is not valued in our balance sheet. Even though its estimated market value based on year-end prices is around EUR 372 million, this stock is especially valuable to us because it gives the group the flexibility to finance future investments in new CO2 capture and storage or usage technologies while supporting our margins. I will conclude now on slide 30 with the outlook for the current financial year. In 2024, the group expects sales to continue to rise, driven by growth in the U.S., the resilience of emerging markets, and despite the weakness of the residential sector in Europe. EBITDA should be higher than in 2023.
By 2024, the group's capital expenditure should reach around EUR 325 million. Finally, as mentioned above, we'll maintain our debt reduction path with the aim of reducing our leverage ratio to below 1.3x by the end of 2025. Before taking your questions, I will close this presentation on slide 31 with our proposed dividend. On the basis of the full-year results for 2023 and the earnings per share of EUR 5.76 per share, up to 65.5% in 2022, and confident in the group's ability to continue its profitable growth, the board of directors has decided to propose the distribution of a dividend of EUR 2 per share. Ladies and gentlemen, thank you for your attention. Mr. Chomel and I will be happy to answer any questions you may have. François, may we move to Q&A?
Thank you, Mr. Sidos. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. If you change your mind and want to withdraw your question, please press star two. Please ensure your lines are unmuted locally as you'll be prompted when to ask your question. Our first question comes from the line of Yassine Touahri from On Field. Please go ahead.
Yes, good afternoon and congratulations for the fantastic results in the second part of the year. My first question would be on the situation on energy costs. So you had a decline in energy costs in 2023. Do you see a further decline in power costs and fuel costs in 2024? A second question, which is related to this, is could you give us a little bit more color on your hedging strategy?
Have you already purchased a lot of your energy needs for 2024? Then a third question on pricing. I think you have announced a price increase in January in France, in Switzerland, and in some parts of the U.S. When you're discussing with customers, do you feel that those price increases will be successful and will stick in 2024? And then a last question, which is on Senegal. The political situation is relatively tense at the moment. Do you see any impact on your operation and do you have any contingency plan if the situation remains difficult?
Thank you, Yassine. Hugues Chomel will answer the two first questions. I will answer the three and four.
Okay. Good afternoon, Yassine. Thank you for the question. Energy costs, obviously, are coming down in the markets. Now, as you know, this has to be appreciated plan by plan.
Each of our plans is multi-combustible. On landed costs, after hedging, we aim to hedge forward between six to nine months. A large part of costs going forward in 2024 will reflect recent costs by the end of 2023. Now, indeed, the spot market price on electricity in Europe, for example, is going down. As you know, it represents only a limited part of our consumption in France. In Switzerland, where we are exposed to a full spot market, we have a long-range strategy. Costs are already largely fixed. On selling prices, indeed, we have announced price increases in all markets. In Europe, we are back to single-digit price increases, as we did traditionally before the inflation cost. It is still early in the year, but they are so far accepted by the market. In the United States, we had price increases in September.
As you know, it's traditional that price increases take place in April, but we are announcing double-digit dollar increases. It's too early to tell whether they stick or not, but there's no reason to think they should not. Thank you.
I will comment about the emerging markets. We increase prices as soon as possible or necessary. And as we speak, the trend is up, especially in India and Turkey. About your last question about Senegal. There's a political crisis. As we speak, it's business as usual. We produce and sell. We don't even have negative signals, even weak ones, on social networks. And we are never mentioned there. Of course, we remain vigilant and we have planned if things are getting worse, but it's okay right now. We have been there for 25 years, and we are Senegalese in Senegal.
To have a clear idea on what Senegal means to Vicat right now and before we start our new kiln, but we don't expect any proceeds from this kiln this year. We expect that in 2025. As of now, Senegal is 8% of group sales. It's only 5% of EBITDA. So it's still too low. That's the reason why we invest there. But again, right now, it's business as usual.
Thank you so much.
Thank you, Yassine.
We have no question in queue. As a reminder, if you would like to ask a question, please press star one. We will allow a few more seconds for callers to press star one if they wish to raise a question. Mr. Sidos, Mr. Chomel, there are no further questions, so I hand back to you.
Thank you, François. This concludes our call for today. I'd like to thank all of you again for your interest in Vicat and wish you a very good day. [Foreign language] .
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