Good morning, and thank you, ladies and gentlemen, and welcome also from my side, and thank you for joining our today's conference call. Our prepared slides are also available under the Investor Relations sections of our website, www.r-stahl.com. A replay of the entire conference will be at the same place shortly after we will have finished. Please be aware of our disclaimer statement, which you find at the beginning of the slide deck. Now, I pass on to Dr. Mathias Hallmann, our Group CEO, who will walk you through our presentation.
Good morning, ladies and gentlemen. Very well, warm welcome to our Q2 2023 Analysts and Investors Conference Call. We can report another positive quarter in Q2 2023. Our orders jumped 16.2% year-on-year to EUR 89.3 million, driven by rising demand from all sectors. Sales increased, with the exception of Americas, in all regions, at an average of 13.3% to EUR 76.7 million. Our EBITDA pre more than doubled to EUR 8.7 million, resulting in an EBITDA pre-margin of 11.3%. Free cash flow was slightly reduced by EUR 2.2 million - EUR 3.1 million. Net profit increased from a loss last year of EUR -0.9 million, to a profit this year of EUR 1.8 million. Earnings per share ended at EUR 0.29 per share.
Looking into our sales development, we saw another strong development in Germany, our home market, with an increase to EUR 19.7 million, a change of 10.2%. Very nice development in the central region, with, we ended at EUR 34.3 million, a change of +18%. Also a nice development in Asia Pacific, EUR 14.6 million. We ended, that's also an increase of 18.9%. Only Americas, we had a slight decrease of roughly 5% to a level of EUR 8.1 million. Looking at the orders, we would expect that the end, the year will also end with a positive development in our Americas region. If we look in our profitability statement, again, we see sales increasing from EUR 67.7 million - EUR 76.7 million.
Our cost of material ratio remained stable at a level of 34.4%, prior year was 34.5%. We are, we are managing well with, with inflation. Our personal cost only slightly increased despite the strong growth on the top line. We have to expect some increase in the second half of the year from an expansion of our staff and the collective agreements with the unions, which will show significant impact in the second half. Operating expenses show a raise to 14.4%. EUR 800,000 of that came from the deconsolidation of our subsidiaries in Sweden and Malaysia, which we closed last year.
Now we had, we had to swallow the differences in the exchange rates from the equity we put in these subsidiaries when we, when we set them up and when we closed them. Yeah, the EBITDA pre-shows a doubling, more or less to a level of EUR 8.7 million. Cash flow statement. Yeah, cash flow. First, cash flow increased nicely to EUR 6.3 million due to the increased net profit, mainly. Then we see a decrease in the cash flow from operating activities as we had to build some working capital in the second quarter in order to, to cope with the growth. Last year, we could reduce working capital significantly, so that's, that's driving some, some change.
Cash flow from investing activities was on the same level, so we end with a slightly decreased free cash flow, which decreased to EUR 3.1 million, and we had EUR 5.3 million last year. Overall, net debt increased to EUR 42.1 million, while we had EUR 29.2 million last year. Looking in our order and sales development, we saw another very strong quarter. On the order side, actually, it was the second strongest quarter in the last three and a half years, with EUR 89 million. Also, the quarter from a working day perspective was much shorter than the first quarter. We ended with sales volume of EUR 77 million, the overall development is positive. We would expect to see a slightly higher sales in the third quarter.
Orders right now seem to be stable, so we, we, we see continuing strong demand for our products in, in, in the near future. The impact from disrupted supply chains are becoming smaller, and sales will continue to improve in almost all regions and sectors, when we look forward. We, we would expect that this nice development will continue in, in, in the next quarters. That brings me to our outlook. We remain with our sales forecast, which will we, we expect to end the year between EUR 305 million and EUR 320 million. We expect to see our EBITDA between EUR 30 million and EUR 36 million.
I have to admit that we, if the development continues, we would see both numbers ending at the higher, or at the positive end of the range, so that we, that we target to come close to the EUR 320 million, and we target to come close to the EUR 36 million. Free cash flow, due to the working capital build up, we would expect to be a single-digit negative EUR million amount. Nevertheless, we think we should reach, we should reach the top of the, the top of the working capital build up in, in the third quarter, and then with, with the further, further stabilizing supply chains, we should bring it down to towards the end of the year.
Overall, we should also see a slight increase in our equity ratio, as long as the interest rate levels remain stable. Risks we see are still in the Russia-Ukraine crisis, which is not really predictable. As I said, the supply chain risks are softening more and more. We should have it well under control. What we face right now is really a labor shortage. In many of our locations, it's really hard for us to find skilled labor in order to fill empty positions, which is right now a little bit working against our growth expectations.
We, we target this with, with our strong education programs, with automation activities, but this labor shortage is definitely something which is, which has to be managed in the near and midterm future, and is softening a little bit, the, the, the growth line. We will work through that. This is it from, from our side. Yeah, that was it was a positive quarter. We would expect another positive third quarter, we, we are overall positive in our expectations towards the end of the year. Thank you very much, now I'm open for questions.
The first question is from Klaus Schlote, from Solventis Beteiligungen. Please go ahead.
Yes, good morning, Dr. Mathias Hallmann and Judith Schäuble. I've, I've got a question concerning the personal cost. Was in H1, was about EUR 65 million, and you said that the number will go up in the second half due to higher labor and wage increases. What's your expectation regarding this figure for H2? Will it go to EUR 70 million?
We are not 100% sure how we can fill empty positions. This is the, the biggest uncertainty. The collective labor agreements we closed all over the place amount up to an increase of 6%, roughly. That was in Germany, but that was also in, in, in the rest of the world. Then there will be some impact from additional positions. I, I would, I would expect an increase, and, and some of these effects were already there in the second quarter. Only some. I would expect an increase between 5% and 7%, maybe.
We'll come close to EUR 70 million, about?
We would come close to 70.
Yeah.
I would also expect some growth in the second half, half of the year, as we ended the first half with the order backlog of EUR 137 million. In the meantime, we should have an order backlog of close to EUR 140 million. We are expanding capacities here and there. We should, we should be able to compensate.
I've got a question regarding the Savard Gore-Tex participation because the ruble was weak during the first half of this year. Yeah, as the beginning of the year, it was about RUB 75, now it's about RUB 90, but there was no depreciation of the participation.
Yes.
Why, why is that?
Because the com- because the organization is developing strongly. We see another, we see potentially another growth of Gore-Tex of roughly 20%. It's, it's highly profitable. We have made, we have decided about dividend payments, and dividends are coming. From, from all angles, we were looking at this investment, we had no, no good reason for any depreciation.
Could you please remind us what, what is the running number for the dividend payment?
RUB 10 million per month, which is the limit given by the Russian state. Which w e have the dividends we, which were decided up to now, will run until February. We will most likely put another dividend decision in place next week, which would then cover the next, the following 18 months.
The dividend, most likely will not be lower than the running one?
This is the crystal ball. I have to look into now. I don't know what our friend Putin is planning to do.
Any further questions, please press star and one. Once again, to ask a question, please press star and one. We have a follow-up question from Klaus Schlote. Please go ahead.
Somehow I got lost in the space. The Americas was kind of flat, flattish business, and you said it will, you know, be better in the second half of this year. Why was it flattish? This is kind of, yes, jumps to your eyes, compared to the other regions. Was there some specific reason why, why you were, why Americas was, was holding back in the H1?
Yeah. I mean, first we have to see that we had 40% increase last year. In the Americas, we see further increase on the order side. There is some project business, with, with, longer lead times, where we need to have, clarification with customers engineering, so that we've, we would expect, another increase in, in the second half. We also have to admit that the oil and gas.
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Yeah, you are back now, yes.
Okay. We have, we have good orders. Many of them have some, have longer lead times because of customer clarification and engineering, which is involved. That's one reason, and the other reason is there was some softness in the chemical industry and the pharmaceutical industry in the first half of the year, while LNG and oil was strong. Now we would expect also there, a recovery in the second half. Overall, we have the orders. Order backlog is good, and we will definitely see a growth over the year.
Is there any, any new news regarding the credit side of the business?
We are coming close to renewing our financing with our bank consortia with an increased volume. We are well on track, and I would expect that we close it in the third quarter.
Okay. Then, I was reading in the, in the, the half year's report about this company. You have got a, a strategic partnership.
I save.
i.safe MOBILE .
I save.
What, what is going on there? What, what, what is this all about?
I Save Mobile is a pretty young company, and they are, as the name says, I Save Mobile. They are concentrating on mobile devices, like phones, tablets, in the Ex area. Our product ranges are very complementary to each other and t hat led us to this strategic collaboration. I would expect that that co-collaboration in the near future will, will also move in, in, in, in other directions, like R&D collaboration, maybe support in, in manufacturing and, and, and, and in other spaces. The, the, the logic behind is that it's very complementary to what we do.
Do you see any turnover coming out of that already or in anytime soon?
There will be turnover in the next, in the next quarters. It will not, it will not have huge impact in the first step that needs to be built up because we, we are not known as a player in this space. Definitely it gives us the, the, the opportunity to have a full, complete offer for some customers where we, we, we, we couldn't offer the full range in the past.
Okay. Well, thank you very much.
Welcome.
For any further questions, please press star and one. There are no further questions at this time. I'll hand back to Dr. Mathias Hallmann for closing comments.
Yeah. Thank you very much, ladies and gentlemen, for participating in this call. You may have heard that we changed the date for our Q3 conference call, which is now on the seventh of November instead of the ninth of November. That's just for personal reasons, no business background. If you haven't noticed that, please be aware that we will be two days earlier for our Q3 publication and conference call. Again, thank you very much, and hope to have you in the call in November then.