Welcome. Thank you for your participation in today's audio webcast of Südzucker AG. As mentioned, in the invitation, the underlying presentation has been published on our homepage today. You can also follow the slideshow via the distributed webcast link. Today, we release the report for the financial year ending 28th of February, 2023. We are going to explain the highlights of the year and give details about the guidance for the current financial year, 2023, 2024. We are happy to take your questions following the presentation of our CEO and CFO. A recording of this call will be available on our homepage for those who are not able to participate. Now, I would like to hand over to our CEO, Niels Pörksen. Niels, please go ahead.
Thank you, Nikolai. Good afternoon, ladies and gentlemen. On behalf of my colleague on the executive board, Thomas Kölbl, it gives me great pleasure to welcome you to this year's analysts and investors conference. Before we get into the details, let's start on page 4, and first, take a brief general look at the past fiscal year, 2022, 2023. It was a successful year, but unfortunately, also another one marked by distortion in the environment. Although the Corona situation has eased further, effects were still felt in many places. For example, there were still some disruptions in global supply chains. The end of one crisis was unfortunately seamlessly replaced by the start of a new one, the Ukrainian War, which continues to this day.
Its effects concerns us every day, whether indirectly through increased raw material and energy prices, or directly in our business activities in the crisis area. We presented our Group Strategy 2026 PLUS, for the first time at the annual press conference, 2021. Over the past 12 months, we have translated it into our day-to-day activities. The positive energy from the demanding strategy development phase is now flowing into implementation and the regular critical review of our original targets. The framework has been set, the plan is in place, all the employees know what needs to be done, and concrete projects and initiatives are being implemented. As in previous years, I would like to take this opportunity to emphasize that we, as executives, are very proud of what we have all achieved together.
Thanks, in particular to the high level of commitment of our employees, we have managed to successfully overcome all the challenges, the difficult phase of the Corona pandemic, the distortions since the outbreak of the Ukraine War, and the additional effort on the Strategy 2026 PLUS. In each phase, we were able to fulfill our obligations as a producer and supplier of food, and to provide our customers and thus consumers with our products. We would therefore like to express our sincere thanks to everyone's commitment, be it our customer, our supplier, and our employees in these difficult situations. Let's now take a brief look at the figures for the fiscal year, 2022, 2023, on page 6. Thomas Kölbl, as always, will go into the financial details later.
At group level, we recorded a significant increase in revenues to EUR 9.5 billion, driven by all segments. I would particularly like to point out that we were able to continue the dynamic turnaround in the sugar segment and achieved an improvement in earnings of around EUR 250 million. In addition, the increase in earnings in the CropEnergies segment by more than EUR 100 million to another record level, is particularly noteworthy. Overall, consolidated operating results thus rose significantly to more than EUR 700 million. Let us now turn to the overview of the individual segments. I would like to start with the Special Product segment, and here with Beneo division on page nine. Beneo primarily produces functional ingredients, has a global presence in its and is therefore also a distribution partner for other Südzucker Group companies.
This gives us an excellent starting position for further synergies within the group, which we are continuously expanding. The trend towards healthy eating continued in 2022, 2023. Beneo serves it, for example, with chicory-based dietary fiber, texturizing rice ingredients, and vegetable proteins. These ingredients, derived from natural raw materials, are used in a wide variety of food products, such as dairy products, cereals, baked goods, and even baby food and spreads. In addition to capacity expansion at all locations, the year 2022, 2023 for Beneo, was primarily characterized by the integration of the Dutch company, Meatless, which was acquired in the first half of the year.
On page 10, I would now like to present the business development in the Freiberger division. In Europe, in particular, increased consumer demand for private label products led to an increase in revenues. At the same time, continuously rising costs, particularly for the raw material and energy, led to significant price increases in production. However, we were able to pass these on the markets more and more after a time lag, particularly from the second half of the financial year. In addition to a new premium pizza line in the Berlin location, Freiberger successfully launched a new marketing concept last year. Under the label, Pizzatainment, popular pizza recipes are combined with major entertainment brands, such as Super Mario or FC Bayern Munich.
Let us now turn to page 11, to the smallest unit within the specialty product segment, the PortionPack Group. PortionPack is focused on the so-called HORECA sector, which includes hotels, restaurants, and catering. This was most affected by the Corona pandemic. When the restrictions were eased or lifted in the last fiscal year, a significant recovery in sales volumes was also achieved. In addition, PortionPack pushed ahead with portfolio expansion and the development of a new customer group through the acquisition of the Dutch Orange Nutritionals Group, thus further strengthening its market position. The new bundling of production capacities at the Telford site in Great Britain, within the framework of a new factory building, also serves this purpose.
Let's move on to page 13 and the CropEnergies segment. As the leading European producer of renewable ethanol for the fuel sector, CropEnergies makes a significant contribution to the urgently needed greenhouse gas savings in road transport. Subsidiaries' product portfolio also includes the production of neutral alcohol, protein food, and animal feed products, and liquid CO2. CropEnergies was particularly exposed to the distortions in the commodity market triggered by the Ukraine War. Nevertheless, at the end of the year, supported by a favorable ethanol price trend, we succeeded in posting another significant increase in earnings to a new record level. We really congratulate the entire CropEnergies team on this achievement.
With a view to expanding its product portfolio to include bio-based chemicals, CropEnergies announced last year that it was examining the possibility of building a plant to produce renewable ethyl acetate, the basic material for the chemical industry. This review has since been positively concluded, and CropEnergies is processing ahead with the planning of the construction at full speed. In addition, investments were made in other future technologies. These are also primarily aimed at two climate-friendly objectives: firstly, to develop further applications for the use of ethanol, and secondly, to expand the raw material base.
We now continue with the starch segment on page 15. The starches, saccharification products, ethanol, and byproducts produced by our Australian subsidiary, Agrana, from various raw materials, are used for different technical applications in both the food and animal feed sector and as fuel. In the starch segment, too, a strong focus in fiscal 2022, 2023 was on maintaining delivery capability and security of supply. On the one hand, the positive price development led to an increase in revenues, but on the other hand, it also caused a wait-and-see caution customer behavior, which led to a lower sales volume. In the starch segment, one of the main tasks remains to gradually pass on the price increases to the market.
On page 17, I would now like to say a few words about the food segment. The Ukraine war directly affected the food segment the most, as Agrana has production facilities in both Ukraine and Russia. The outbreak of war shortly before the end of the 2021, 2022 financial year, led to a mandatory impairment review as part of the 2021, 2022 financial statements. The necessary adjustment were made. At the time, we already announced that fiscal 2022, 2023 could also be affected. Unfortunately, this has been confirmed due to the increased cost of capital. As a result, the impairment test on goodwill and non-current asset revealed a further significant need for adjustments totaling EUR 15 million. Let's conclude the segment overview with a look at the sugar segment at page 20.
In 2019, we adopted a restructuring plan with the aim of focusing on the European sugar market. This made it necessary to adjust our factory and administrative structures. On the one hand, this enabled us to reduce the structural surplus in the EU sugar market. On the other hand, our measures were aimed to reducing our costs. We successfully implemented this restructuring plan and also added further measures on its basis, which were implemented, expanded on an ongoing basis. The measures mentioned and our Group Strategy 2026 PLUS, build on each other. The consistent next step in the realignment was therefore also the organizational adjustment of the sugar division, which we implemented in fiscal year 2021, 2022, and which has already borne fruit in fiscal year 2022, 2023.
This includes, among other things, the sugar division's market relaunch and the further optimization of logistics and structures. This has made us more agile and faster, which is a major advantage in the sugar market, which continues to be very volatile. Even at the beginning of the Corona pandemic, the sugar market environment in the global market and EU was positive. However, the lockdown measures, some of which were very extensive, temporarily undermined this development. As a result, the expected price increases have been delayed. They have now only gradually materialized from summer 2021, which an acceleration of this upward trend observed in the last 12 months. In fiscal year 2022, 2023, we were able to benefit from this and compensate for the huge cost increases in raw materials and energy prices.
In fiscal year 2023, 2024, this trend should continue and contribute to the expected further significant improvement in earnings. Let us now turn to the political environment on page 2022. The political environment is important for our business model in many ways. With regarding to agricultural policy, the EU's Green Deal will set an important course in the coming years, for example, with regarding to the planned requirements for reducing the use of crop protection products and fertilizers. In principle, we welcome measures for even greater sustainability in agriculture. However, it is important that the adjustments are practical and can be implemented. We are therefore watching the European discussion on the revision of the Sustainable Use of Pesticides regulations with concern. Blanket bans on pesticides and considerable areas of cultivated land are not expedient.
With regard to the nutrition policy, the harmonization of food labeling and the possible introduction of nutritional value profiles are still under the discussion at the EU level. In Germany, the Federal Ministry of Food and Agriculture has presented its nationwide rules for advertising directed at children. The plans include very far-reaching advertising bans for foods that exceed certain limits of sugar, fat, and salt. The assessment of the limits is to be based on the requirements of the WHO's nutrition profile model. In our opinion, the BMEL's plans are excessive and unsuitable for making a decisive contribution to preventing childhood obesity.
Energy policy in Germany and Europe is also an important factor influencing our company. Our aim here is to operate in a climate neutral manner in the long term. On viable solutions, it's to use biogas obtained from beet pulp. To achieve this, however, the political framework conditions must be created, which will first be defined at European level as part of the Renewable Energy Directive. It is then up to the member states to implement the regulations that have been made. In Germany, this will be done, among other things, by the German government's biomass strategy, which we expect in the fourth quarter of 2023.
Let's now turn to the strategy on page 24. Ladies and gentlemen, we first presented the Group Strategy 2026 PLUS to you in 2021 and gave an update last year. As already indicated at the beginning of my presentation, the strategy has now become part of our everyday corporate life and thus a natural part of our actions and decision making. Sweet sugar products and ingredients are part of everyday's life, and we are working to ensure that this remains the case in the future with our existing portfolio, as well with the new products to be developed. We do not want to go into the basics general focus points of the 2026 PLUS strategy again at this point, nor do we want to detail transactions and projects that have already been published. Instead, we want to focus today on those projects and initiatives which, beyond what has been published, are of particular importance at the present time. Against this background, I will focus today on the selected initiatives, bio-based chemicals and sustainability.
Let us now turn to page 25 for an update on the bio-based chemicals initiatives. Here we are well on track with promising projects. We already have extensive expertise within the carbohydrates platform in sucrose, starches, and ethanol. This gives us an excellent starting point for further developing existing technologies, developing and using new technologies ourselves, or, if necessary, acquiring them. Bio-based chemicals are obtained from renewable raw materials. To produce them, we use the carbon bound as CO2 in plants, which we first process into sustainability, sustainably produced ethanol. At the same time, we thus ensure further and longer term binding of the greenhouse gas of CO2. As a processor of renewable raw materials such as beet, chicory, rice, corn, potatoes, and wheat, Südzucker is at the source of the raw materials and has a wide selection of renewable carbon sources. For example, CropEnergies plans to produce renewable ethyl acetate for the chemical industry based on ethanol in the future. Renewable green hydrogen will be produced as a by-product.
The evaluation for the construction of the production plant required for this purpose has now been completed. The investment volume will amount to approximately EUR 120 million-EUR 130 million over the next few years. Construction is scheduled to begin in early 2024, with production starting in summer of 2025. One of the chemical industry's path to sustainability is that the de-fossilization, which has already been initiated in transport and energy generation, chemical food stocks for plastics and polymers for everyday products, such as packaging, building materials, automotive applications, paints, adhesives, fibers or clothing, which were previously produced on the basis of oil and gas, will gradually be replaced in the future by products based on renewable alternatives.
Renewable ethylene will be able to make an important contribution to this. Against this background, we have acquired a 50% stake in the Dutch start-up, Syclus, for the production of renewable ethylene from ethanol. As with renewable ethyl acetate a year ago, we are now in the testing phase to ensure technical commercial feasibility. This process is expected to be completed by the end of 2023, potential investment volume is expected to be more than EUR 120 million.
Let's now turn to the topic of sustainability on page 26 and 27. Our corporate purpose is to contribute to a livable, healthy, and sustainable world by extracting the best from plants. The issue of sustainability is closely linked to this, and therefore, a key component of our strategy. The projects and goals mentioned at this point last year have been successfully implemented and form a very good basis for the planned next steps. In this fiscal year, we will continue to shape the key fields and implement the resulting measures. These includes an analysis of physical climate risk along our agricultural supply chain and the expansion of the management approach to human rights.
I would like to particularly highlight on page 27, that we achieved validation of our emission reduction target by the Science Based Targets initiative in February 2023, just one year after we joined. Südzucker Group is thus the first European sugar producer which validated emission reduction targets in line with the global reduction target of 1.5 degrees Celsius. The successful placement of this first Sustainability-Linked Bond in the company's history was also a highlight of last year, underscoring our commitment to sustainability.
Ladies and gentlemen, to conclude my presentation on page 29 and 30, I would now like to summarize our priorities as Executive Board for the current fiscal year, 2023/2024. Our corporate strategy, 2026 PLUS, provides the framework in which we operate in all our actions and decisions. We have a clear plan and are working to implement it in all key areas. Südzucker is in comfortable starting position. We can make our decisions, which we show graphically on page 30, on the basis of a broadly diversified high cash flow quality. In doing so, we are caught between our four prioritized issues: the targeted reduction in the absolute level of debt, the further strengthening of resilience in the Sugar segment, the continued expansion of the non-Sugar segment, and the necessary high level of investment in the area of sustainability.
Despite the increase in cash flow and earnings, the cost and price increases in the past fiscal year led to a significant increase in working capital requirements, and thus, to an increase in the level of debt. An important goal for us is therefore to reduce the absolute level of debt again. If we are not yet able to achieve this reduction in 2023/2024 due to the prevailing environment, we will aim to do so in the following fiscal years. The diversification of the company, in terms of expanding the non-sugar segment, has proven successful in the past. We therefore intend to systematically continue on this course. Investment decisions that we have already made and communicated in part, as well as those that are currently still in the decision-making phase, should and will contribute to this. The sugar segment is currently again generating high results and returns.
We are aware that the characteristics of this business unit is its strong fluctuations. It is therefore important to take advantage of the current high cash flow, which strengthens its future resilience. It is in the area of sustainability that some of the greatest challenges arise. On the one hand, there are our own ambitious targets, on the other, we are confronted with an extremely dynamic, normative environment that continuously confronts us with new tasks and requires a very high degree of flexibility and adaptability. Overall, it's our task to reconcile the sometimes competing goals, that we can increase the value of the company across the fluctuations through secured, sustainable growth in the group. Now I would like to take this opportunity to thank you for your attention and hand over to my colleague on the Executive Board, Thomas Kölbl. Thomas, please.
Thank you, Niels. Ladies and gentlemen, I would also like to welcome you to this year's Analyst and Investors Conference call. A few of your feedback on last year's event, we limit the overall presentation time in order to provide more time for your questions. I would therefore like to focus my presentation mainly on the summary pages, some selected profit and loss account pages, and the outlook at the end. As you can see on page 32, we achieved all our targets for the fiscal year 2022, 2023. In the process, we very clearly exceeded the targets we had originally set in April 2022. Even the earnings targets, which had been raised several times in the course of the year, were exceeded in the end, and the company was thus able to regain its historical earnings power.
This is all the more remarkable as we were confronted with an exceptional situation in raw material and energy markets as a result of the war in Ukraine. Energy prices that were at their peak, more than 10 times higher than before the start of the war, and grain prices well above the all-time high of the 2007 financial crisis. These very good operating results are also reflected in the key figures on page 33. In parallel with improvement in operating results, cash flow increased by more than EUR 350 million, or more than 60% to more than EUR 900 million. The ratio of net financial debt to cash flow was again significantly improved. Also, net financial debt showed an increase. Overall, the solid equity ratio, despite the significant increase in total assets, was confirmed at above 40%.
On page 34, we would like to draw attention on the one hand, to the steady improvement in revenues and profit in recent fiscal years, but also to the further very significant improvement in fiscal 2022, 2023. The increase in sales to EUR 9.5 billion was driven equally by the Sugar segment and the non-Sugar segments. The continued positive development of the non-Sugar segments, and in particular, the continuation and strengthening of the dynamic turnaround in the Sugar segment, led to an overproportionate increase in earnings to an EBITDA level of over EUR 1 billion for the group. Following on from this, you can see on page 35, the broad and well-balanced earnings diversification regained in the group. I would also like to take this opportunity to emphasize that structural cash flow has also increased very significantly to over EUR 600 million.
Other aspects worth mentioning are the continued comfortable liquidity situation and our solid financing profile, not least supplemented by the successful placement of our first Sustainability bond in October 2022, in the amount of EUR 400 million, with a term of five years. As a result, the key financial ratios, which are also important for rating purposes, improved significantly for the fourth year in succession. The very positive operating results performance is also reflected in a sharp rise in consolidated net income after minority interest, as the main basis for determining the dividend proposal of EUR 0.70 per share.
Our dividend policy remains focused on continuity and sustainable earnings growth, and takes into account the significantly improved operating results and cash flow performance, and the positive outlook for fiscal 2023, 2024, which I will discuss later. The resulting payout ratio of 36% is therefore back once again within the targeted corridor of 30%-40% of consolidated net income after minority interest. Before we move on to the Group profit and loss account, I would like to briefly mention on the last page of the summary, page 36, that so far, we have been showing an excellent start to the new fiscal 2023-2024.
Let's move on to page 39, with the some selected P&L pages. The result from this reduction in special items is attributable mainly to the Sugar and Fruit segments. In the Sugar segment, the final decision of the Supreme Court of Vienna resulted in a significant reduction of the charges relating to the fine proceedings initiated by the Austrian Competition Authority in 2010. As a result, the amount of the impending fine has also been reduced accordingly, and a significant portion of the provision that was set aside when the proceedings were initiated, has been released. At the same time, the sugar segment generated income from the attribution of fixed assets because of the sustained improvement in results at the wheat starch plant in Zeitz in Germany, which was offset by small impairments in the sugar factories that were closed in France.
Expense in the fruit segment resulted mainly from impairment charges on goodwill and fixed assets. In addition, expenses were incurred in the Freiberger division, the special product segment, in connection with closure of a U.S. production site as part of a factory optimization and cost reduction plan. The equity result was almost exclusively attributable to the sugar and starch segments. Segment sugar was predominantly attributable to ED&F Man. Since the first quarter of fiscal 2022-2023, ED&F Man has been recognized as other investments, as a significant influence on financial and operating policy decisions has ceased to exist. As a result of the discontinuation of at equity consolidation, currency gains of around EUR 10 million previously recognized direct in equity, were recognized in income. Otherwise, the positive development in earnings resulted from significantly higher sugar sales revenues by the Südzucker Group. In the starch segment, it mainly reflects the earnings from the starch and ethanol activities of Hungrana Group.
Let's take the next stop on page 14. Net financial results totaled minus EUR 51 million, including net interest result of minus EUR 41 million, and result from other financial activities of minus EUR 10 million. The higher net interest expense results from higher average debt and the Sustainability bond issued in October 2022, with an issue volume of EUR 400 million, as well as from higher interest expense from pension obligations. The absolute tax payments went up sharply following the improved earnings, the corporate tax rate went down to 22%. This is mainly due to the sugar segment's continued improvement in earnings, as well as the option to partially utilize on loss carryforwards in the sugar segment.
Let's continue on page 41. Cash flow per share rose significantly. Reporting earnings per share reached EUR 1.93, against EUR 0.32 the previous year. Dividend proposal rose from EUR 0.40 to EUR 0.70 per share, representing a payout ratio of 36%. This means we are back within the target corridor of 30%-40% of consolidated net income after minority interest. Let's continue on page 43, taking a look at this net financial debt development in detail. The increase in net financial debt is attributable to the significant rise in capital expenditures, and in particular, to the following three largely inflated-related components. Firstly, the sales revenues-related increase in inventories in the sugar segment. Secondly, the higher level of receivables in the group due to the increase in revenues by close to EUR 2 billion. Thirdly, the general cost-related increase in raw materials and supplies. Despite the increase in net financial debt and in light of the significant earnings and cash flow improvement, resulting financial ratios did improve significantly.
Let me now jump directly to the outlook for the current fiscal year, 2023-2024, on page 69. In this fast-moving time, it is necessary to regularly point out the risks that continue to exist and that can influence our expectations and plannings. For example, energy obtained from various sources and available to us at all times, can no longer be taken for granted. As a result, in addition to risks from hedging transactions, we are also exposed to risks from the actual physical availability of energy. The economic and financial impact of this, but also of the high volatility on the sales and on the procurement markets, both in terms of prices and volumes, is difficult to estimate even in fiscal 2023, 2024. We issued our first outlook for fiscal 2023, 2024 back in December 2022. The expectation for consolidated operating results was within a range of EUR 650 million-EUR 850 million.
In April this year, we raised this range to between EUR 725 million-EUR 875 million. Group revenues are expected to exceed the EUR 10 billion threshold for the first time in Südzucker's history, in a range of EUR 10.4 billion-EUR 10.9 billion, therefore expect a further improvement in revenues and earnings for fiscal 2023, 2024 as well. In the sugar segment, we achieved a turnaround in the last fiscal year after four years of losses, and aim to continue this in 2023, 2024, with a doubling of earnings in sugar. The special product segment will achieve a significant improvement against the backdrop of the ongoing market pass-through of cost increases.
The CropEnergies segment is expected to generate earnings in a range of EUR 95 million-EUR 145 million, thus remaining at a high level in historic context. The starch segment expects a significant decline, while the food segment anticipates a stable development. Expected increase in EBITDA to mid-point EUR 1.2 billion, as shown on page 70, follows the development of the Group's operations result. We plan a significant increase in capital expenditure to EUR 600 million. The increase will be determined mainly by measures to achieve the various sustainability targets, each year the targets under SBTI or targets within our financing structure. In addition, as mentioned by Niels, we are further expanding our non-sugar activities on the one hand, through capacity expansions, but also through new plants, in order to be able to meet the further increase in demand.
Against the background of the expansion of profitability, we might also assume an increase in the return on capital employed, as shown on page 71. As mentioned by Niels, we are aiming for an absolute reduction in net financial debt. Based on the parameters currently available for the business and the environment, we have to assume that we will not yet achieve this in the current fiscal year. The fiscal year is still young, and we are working hard to make a positive impact on our targets within the fiscal year. In any case, the start is promising. Due to the expected improvement in cash flow, the important ratio of net financial debt to cash flow should continue to improve for the 5th year in succession.
Ladies and gentlemen, let me conclude my presentation on pages 72 and 73. A diversified and well-balanced portfolio will help to make the current financial year to another successful one from the group's perspective, driven largely by the expected earnings improvements in the Sugar and Special Product segments. Overall, as mentioned, we can speak of a very successful start to fiscal 2023, 2024 so far. Last year, we explained to you that we wanted to create room for maneuver by improving earnings and thus freeing up funds so that we could proactively shape Südzucker's future. We have reached this milestone sooner than expected, with an EBITDA expectation of EUR 1.1 billion-EUR 1.3 billion. As Niels and I pointed out in our presentations, we want to take advantage of the opportunities to systematically pursue our strategic goals.
In this way, we can safeguard what we have achieved, prepare the company even better for the fluctuations of the future, and thus contribute to sustainable profitability increase, creating value over time. We would like to take this opportunity to thank you for your attention and look forward to your questions. Therefore I hand it back to the operator.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question is from the line of Alex Sloane with Barclays. Your question, please.
Yeah, hi, thanks for the presentation and taking the question. It's really just around sugar and the outlook, maybe some of the underlying building blocks to the guidance that you've given. Obviously, a good level of profit increase expected this year to EUR 400 million-EUR 500 million. What are you assuming? I think this time last year, you gave us some quite explicit guidance as to the kind of price ambitions that you had going into recontracting in going into recontracting in the summer. Could you maybe update us on how you're thinking about that this year in the context of, you know, potential European supply and also the backdrop of what's going on world sugar markets? Thanks very much.
Thank you, Alex, for the question relating to the sugar guidance 2023, 2024. First of all, we foresee an more or less an doubling in operating result in the sugar segment, in this guided corridor of EUR 400 million-EUR 500 million. We are early in the year, and clearly, it is important to note that the old rule of thumb does not apply for some time, mainly due to less sugar volume produced and sold following the factory closure 2019, leading to a refocus on the European market. The beet-based formula is not linear at the upper end. Following two years of Corona and in light of the Ukraine war, there is still a lot of uncertainty, especially in the European sugar market environment, especially also about our sales volume development, yeah?
Now, coming to the guidance. To derive the guidance sugar earnings delta of plus EUR 200 million, 2023, 2024, against 2022, 2023, you should start looking at the additional revenues generated and deduct the additional costs, yeah? For the revenue development, you should assume an increase of more than EUR 1 billion, based on a European market sales volume of around 4 million tons of sugar, and an additional average price increase in fiscal 2023, 2024, of around EUR 300 a ton, yeah? This price increase is very important, assumes no price changes for sugar marketing at 2023, 2024, starting first of October 2023, against sugar marketing year 2022, 2023, ending of September 2023. As always, at this point in time, the campaign outcome and resulting marketing volume is uncertain, as well as the related campaign costs, right?
It's very early to give you a concrete guidance, but I think in general, we have, let me say, the concrete framework we set for the sugar guidance 2023, 2024. For this, against this, let me say, additional revenue, increase of more than EUR 1 billion, we have on the other side, the costs. These costs should raise by more than EUR 800 million. The increase contains higher costs for beet, for energies, services, packaging, logistic, labor, and other inflated related costs. Let me say, this is the overall framework for the doubling, the guided doubling in operating profits in the sugar segment.
That's very clear and helpful. Thank you.
Ladies and gentlemen, if you would like to ask any further questions, please press star and one. The next question is from the line of Anton Brink with Antaurus Capital Management. Your question please.
Yes, gentlemen, I would have three or actually four. First question is on Q4, specifically, Sugar segment. You're doing roughly EUR 100 million operating profit, which appears to be quite comparable to 2012, 2013. I mean, reading your outlook statements on the Sugar segment, where you are basically linking it to the guidance. You indicated this year, evidenced also by very low beet yields, you have been hampered by additional costs due to the very low operation or fixed cost coverage.
Secondly, I mean, Agrana's performance has been really weak in Q4, comparatively to, let's say, the other sugar activities. If I'm thinking, because partly relates to the question that was just raised, but if I'm thinking about your guidance, and basically, if we speak about the building blocks, you say pricing, you assume to be stable. First question would be: Isn't that conservative in the context of, let's say, 20% higher EU spot prices, much higher global prices, and given the fact that you were really early in contracting last year, I believe? I would argue your negotiating position is much better this year in the context of where the European sugar market stands in a desperate situation.
Secondly, a question on yields. As you also say in your outlook comments on page 97 in the annual report, you say to expect no charges related to low capacity utilization in the coming fiscal year. Shouldn't that then imply higher H2 profits than this year, purely on the basis of better cost coverage? Last year you did EUR 200 million EBIT. Is the right assumption then to expect EUR 200 million-EUR 250 million EBIT H1, EUR 200 million EBIT H2?
Hello?
Yes, I'm still there. I can continue with questions. Maybe a question-
As you like.
A question on working capital, because at first, there's an assumption of stable net financial debt, where CapEx will increase to EUR 600 million. Wouldn't you agree with me that, I mean, ultimately, this working capital should result in cash flow when sugar prices come down again? Implicitly, I mean, you should sort of correct for that in debt calculations, I would say. The last question is on tax losses carried forwards. Obviously, the business has been struggling for quite some years. To what extent can the tax losses carried forwards suppress your tax burden going forward? I mean, are we talking sizable figures, EUR 100 million, EUR 200 million? Please elaborate on that.
Anton, let me start with the easy one. The tax with loss carry forward sugar, as of closing February 2023, we had some activation potential of EUR 250 million, and thereof, EUR 150 million in the sugar segment. It brings room that especially in a good sugar year, we expect for 2023, 2024, that the co- tax break will further go down in a corridor with the time frame that we have between 18% and 22%. To your third question, working capital. Yes, if the sugar price would go down, that would bring a relief in the cash inflow from working capital due to the high, lower pricing. Yes.
Then to the several remarks and questions to guidance, give some answers to Alex. First of all, as I said before, you can't compare 2012, 2013 with the current environment. Today, we have a complete other. On one hand, other cost structure, we have due to the capacity adaption, 25% lower volumes. Yeah, so you can't compare that, and today we have inflation in all areas, energy, et cetera.
That is, let me say, the starting point, and then clearly, the second point is, there is, as in the past, and delta in profitability between the sugar activities of Südzucker, Belgium, France, Germany, Poland, and the Agrana Sugar division. Then coming to the concrete numbers, yes, we had in quarter four, EUR 100 million operating earnings, was a good result, and our expectations, by all the uncertainty we shared and discussed with Alex, we foresee for the first half year, also in the quarter one, quarter two, earnings in that area. That would come in EUR 200 million.
For the second half, it's very early if our assumptions are right, okay, we have lower charges from idle costs in H2 if the campaign volume is as planned. Therefore, let me say, this is a fair point. To the pricing, yes, we said for supermarket year 2024 against 2023, a stable pricing. This is the assumption and that will bring then a comparison fifty year to fifty year, this and further increase in sales prices, which brings, let me say, a further kick in. Clearly, to be clear, we discussed we are mid of May, and it's a long way to go quarter to quarter to come to the end of the annual year. There are, I say, not only risk, as we mentioned, there are also chances, but with a view of today, it is a balanced picture.
If, one follow-up question. I mean, historically, the delta in operating profits purely on the basis of fixed cost coverage between Q1, Q2, and a Q4, I mean, it's pretty significant. In that context, the assumption of, let's say, EUR 100 million operating profits in Q1 and EUR 100 million in Q2-
Mm-hmm.
- to me, I mean, it is really really, really conservative. I do not understand the driver t hat would make that a logical assumption.
Now really going in more in detail, we compared 50 years. You have also to have in mind that over time, we have also let an increase in beet costs starting from the next sugar marketing year onwards, due to the, let me say, situation that in fiscal 2022, 2023, the increase in prices has did go up step by step. First, industrial contracts, then retail contracts, et cetera, and phasing out also of contracts in February. We foresee then, in comparison sugar marketing year to sugar marketing, a stable pricing, and that means also in average, prices should go slightly up and therefore also higher peak prices in the second half year ticking in.
Yeah, I know, I understand the logic. I mean, H2, it's difficult to assess because we don't know the pricing. For H1, I mean, it should be after today's Q4 print, there is clear reason to be quite optimistic on H1, or at least the first seven months.
Yeah. Yes.
Implicitly, I would then assume that EUR 100 million for Q1 and EUR 100 million from Q2, that's... I mean, then you're accounting for negatives which are not...
Yeah.
-really out there.
No, if we would take the 100 and 100, we would say 200 in the first half year, an additional EUR 200 million - EUR 300 million in the second half year, coming then to EUR 400 million - EUR 500 million guidance.
Yeah, no, I understand what you say, but I think there's this way to conserve this, but that's another thing.
Okay, yeah, it may be, but with the current framework, we stick to that sugar guidance, EUR 400 million-EUR 500 million.
Anton, it's no problem if you're optimistic. No problem.
Yeah, I know. I will, I will see what happens during the year. I mean, for H1, I think you are too conservative. H2, nobody knows.
Yeah.
It's okay.
Yeah, it's a clear assumption. We understood your view.
Okay, thank you.
There are no further questions, and I hand back to Nikolai for closing comments.
Thank you all for your participation today, and hopefully we can continue the conversation later on. No problem, just call us. We can agree to disagree. We can also find solutions to your questions. No problem, just give us a call, and thank you for your participation today again, and have a nice day. Thank you. Bye-bye.