Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining TAKKT's earnings call for the preliminary results 2022. Throughout today's recorded presentation, all participants will be in a listen only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Maria Zesch. Please go ahead.
Welcome. Welcome to our earnings call for the preliminary results 2022. This is the very first call for our new CFO, Lars Bolscho. I'm very happy that we found an internal successor for the CFO position. Happy to have you on board, Lars, and maybe you give us a short intro.
Thank you. Thank you, Maria. It's a pleasure for me to welcome all of you first time in my new role to our call. My name is Lars Bolscho. Since January this year, I am the CFO of TAKKT, so quite new in this role, but not new to the company. I am with TAKKT for 14 years already. First part of those 14 years in TAKKT Group positions, leading M&A and then also corporate controlling. In the last 5 years, I was leading the finance organization for our European business for KAISER+KRAFT Group and then for the, at that time, newly built division, Industrial & Packaging. I know the company quite well, looking forward to our call today and also to future exchanges with you. With that, back to you, Maria.
Thank you, Lars. In this call, I will start with an overview about our achievements in 2022 and an update on the key topics. I will then hand over to Lars for further details on our financials. Before the Q&A, I will close with a quick first glance into what we expect for 2023. Let me give you a short recap what we wanted to achieve in 2022 and what we finally delivered. Remember, we not only had financial ambitions in terms of sales growth and earnings, but we also presented to you beginning of last year, our new strategy with growth, OneTAKKT, and caring. Let me start with the financials first. We all know that 2022 was quite challenging. What I can tell you is that we have achieved our financial goals last year.
Growth is a fundamental part of our new strategy, and we have set ourselves an ambitious target for 2022. It was quite a volatile and a challenging year with the impacts from the war in Ukraine, from the inflation, from the energy crisis. Still we managed, and we achieved our target of high single digit organic growth. We ended up with 7.5% growth for the full-year, so I would say check mark here. Second, in terms of earnings. In absolute terms, we slightly surpassed our own EBITDA guidance for 2022. I would also say with EUR 132 million, check mark here as well. Last but not least, especially in these times, it's very important that we also deliver on cash. As you know, TAKKT has always been a very cash generative business model.
At the same time, we had substantial investments last year and also the year before in order to improve product availability. As you might remember, free cash flow was slightly negative after the first six months. We then really focused on inventory management in half year two, and we were able to substantially release working capital and increase our free cash flow to EUR 70 million. I would say another check mark. All together, I would say very successful financial year for TAKKT. I would now come to the strategic topics we also have achieved last year. As you remember, we have a three-pillar strategy, growth, OneTAKKT, and caring. Let me just name a few out of them. Last year we set up our IMP division. We started with the integration in full swing now.
We started cross-selling in Germany and Austria and Switzerland and see very good progress in the countries. We also, and we mentioned that in several calls last year, had a very specific focus on inflation management. A key topic of our pricing initiative was definitely to get inflation under control. On the second pillar, on the OneTAKKT pillar, we set up our four new group functions. We started in Europe. We have successfully established them. We did first tech platform harmonization, and we did a global study, a network study for our future logistical footprint. Last but not least, our caring pillar. On caring, it's important for us to have happy customers. Happy customers only come with happy employees, but we also need to focus on our environment.
Therefore, I'm very proud that we achieved already a 20% order intake with NK-based products. 20% of our orders are coming from NK-based products. Customers still rate us very high in terms of customer satisfaction. I'm also proud of, you know, one KPI we also promised in the to you is that we will make sure that our diversity will increase. We already see here that we have some good progress also in terms of female leadership positions. I would say next to the financial topics, also very good progress on the three pillars, on topics in the three pillars which we executed. Let me come to cash, because I think cash is really important. We have seen good cash generation in 2022, and the equity ratio is above the target corridor of 60%.
We have started and are still continuing a buyback, a share buyback program. So far, we have spent around EUR 7 million. At the same time, we also said it's very important to us to increase also our focus on M&A in 23. We have enough financial resources to do some deals from now on. Therefore, I'm also glad to present to you our dividend proposal. Both of you have seen it from Tuesday's announcement, and I have just talked about the cash generation and the solid balance sheet. This allows us to propose a special dividend of EUR 0.40 in addition to the base dividend of EUR 0.60. I would say quite an attractive dividend yield for shareholders. That's it for me at the moment. Now I will hand over to Lars, who will give you more details on our financials.
Thank you, Maria. Let's start looking into some details around our financial performance. We start with a single quarter for quarter four, 2022, before we then look at the full-year, 2022. Starting with TAKKT Group numbers for the fourth quarter, 2022, and first looking at sales. We have seen some economic headwinds in the fourth quarter, and with this, a slowing down of the customer demand. This impact was coming in as expected. We had talked about having softer months ahead concerning the economic environment in our last call already. Reported, we increased in sales by 3.7% to EUR 329.2 million. We benefited from currency exchange rates, especially the strong U.S. dollar, by 4.7 percentage points.
Organically, our growth rate was slightly negative at -1%, mainly coming, as you will see in a minute, from our European business, our division, Industrial & Packaging. That's important to state, we came in as expected for sales in Q4. Looking at our profit at EBITDA next. In EBITDA, we generated EUR 27 million, which is a profit margin of 8.2%. Versus Q4 2021, a EUR 13.5 million, 9.6% profit margin. Currency impact of translation of our USD business into EUR helped on the EBITDA level with approximately EUR 1.5 million for that quarter. As Maria Zesch has already mentioned, we continue to pass through cost increases, but we also had some negative temporary effects on gross margin, with impact on our shown profitability for this quarter.
The main reason for this is our inventory valuation. While we decreased the underlying interest rates assumption last year, we increased it this year due to the higher interest rate level. Comparing now the two years, the quarter for those two years, this had an impact of approximately 0.6 percentage points in a negative way. Second, more temporary aspect is that we had some cost increases and freight costs in the U.S., which then from end of December, we passed on to our customers. Thirdly, we have generated more sales in the fourth quarter out of bigger projects, especially in our Central business, which comes with lower margins. Those impacts mentioned are not expected to remain in this magnitude. Regarding our one-time expenses and gains.
In Q4 2022, we had a gain, so a positive impact net of around EUR 1 million, and it was net positive mainly from releasing an accrual for sales tax risks in the U.S. In the same quarter the year before, so Q4 2021, we had costs of around EUR 3 million, at that time, mainly coming from organizational changes at IMP. Besides those one-time expenses and gains, we have also invested in Q4 2022 into our transformation. You might remember we talked about recurring build-up costs in our transformation, and this added up to approximately EUR 4 million for the Q4. Some of this investment can be seen in our personal costs for adding new competencies to the group, others in other costs for driving our change projects. Now looking into the divisions. Let's look at the division Industrial & Packaging first.
Starting with sales. Sales in Q4 decreased by 5.1%, in this case, both reported and organically. We saw the economic environment weaker in Europe versus U.S. We saw the weakness in our U.K. business to continue, while other regions in the division Industrial & Packaging were more stable. On the right-hand side of this slide, you can see the profit development in IMP. Despite the decrease in sales I had mentioned, we were able to increase our EBITDA margin. We ended up with EUR 23.4 million and a profit margin of 12.8%. The year before, in Q4, our profit margin was at 12.5%. Our gross margin was close to the 2021 margin, which is definitely good success in the difficult inflation environment we are still in.
Looking at one-time costs also for IMP, there was no significant amount in 2022. In the fourth quarter 2021, we had costs of around EUR 2 million. Changing to the division Office Furniture & Displays. Again, looking at sales in the U.S., we saw a better economic environment in Q4 compared to Europe. Sales increase for this division came in at 12.3%. Organically, the division ended up with a very slight increase in sales, 0.5%, because also here we had quite a high currency impact in a positive way. Our development here was better at our brand Displays2go, while our activities with NBF were slightly declining in sales. EBITDA, we finalized Q4 with EUR 5.6 million, a 7.4% profit margin. In 2021, our profit margin was at 9.2%.
The main reason for this lower profitability is gross margin being lower in Q4 2022 versus Q4 2021. This applies especially to our activities at Displays2go, where we had the already mentioned freight cost increases in Q4 and also the impact out of the inventory valuation that I had explained. We also had some one-time effects here, in this case, gains in Q4 2022, out of the also already mentioned release of sales tax accrual. We generated approximately EUR 2 million positive impact. Now, coming to our first division, FoodService. We saw in sales in Q4 the strongest development of our three divisions. Reported growth was at 23.5%, and our organic growth in this division was clearly positive with 11.3%. Both brands in the U.S., Hubert and Sanrio, have been strong with double-digit organic growth.
Looking at EBITDA, we generated in Q4 EUR 4.5 million EBITDA, a profit margin of 6.5%, versus a profit margin of 10.9% in Q4 2021. Here, the development of the gross margin was the main reason for the lower profitability to a high degree, again, driven by the updated assumptions in our inventory valuation, so from our perspective, a temporary impact. We also saw some one-time costs, approximately EUR 1 million, generated due to the organizational realignment in 2022, main part through the integration into the division FoodService. Let's change to the broader perspective, to the full-year. As Maria already said, a successful year 2022 for TAKKT. On sales, we increased sales reported by 13.5% to EUR 1.337 billion.
We benefited all the full-year from currency exchange rates, especially from the stronger U.S. dollar. On TAKKT Group for the full-year, this was an impact of six percentage points. Organically, we were able to generate a 7.5% growth on sales for TAKKT Group. We grew, you will see that in a minute, in all our three divisions, and our growth was stronger in the divisions with focus on U.S. markets. Nice overall growth, and this also reflects what we had given as a guidance, which was a high single-digit growth rate for the full-year. We were also able to translate this into a clear profit increase. EBITDA increased to EUR 132.1 million, which is a 9.9% profit margin.
Here our positive currency impact from translating mainly our U.S. dollar business into EUR was around EUR 7 million. In the year before, in 2021, our EBITDA was at EUR 112.6 million, a 9.6% profit margin. Our gross margin ended up for the full-year at 39.3%. The year before, we were at 40.2%, a decline. Now, half of this decline was coming out of structural mix of business. Our U.S. businesses with structurally lower gross margins were growing stronger. We also had full-year the negative temporal effects I had mentioned when talking about the quarter. Of course, with less impact than on the overall yearly numbers. For the full-year margin range around 0.2 percentage points.
Overall, taking out those two factors, we were close to our target of 40% for the gross margin for the group. In addition, we showed a good operational leverage. Our marketing and also our personal cost ratios were lower in 22 compared to 2021. Looking at our one time effects for the full-year, we benefited slightly. In 2022, we ended up with EUR 2.4 million one time effect. While in last year we were at EUR 6.1 million. In both cases, expenses in the net number. Here, as mentioned for the Q4 numbers, we should keep in mind our additional transformation costs for building up competencies and also functions for the year 22 of around EUR 11 million.
With this, in terms of EBITDA already mentioned, we ended up slightly above the upper range of what we had expected for this year and what we had also given as a guidance. Now looking for the full-year into the divisions. First, again, division Industrial & Packaging. On sales, we grew by 4.4%. The organic growth was at 3.7% versus 2021. All our regions were growing organically except for our U.K. business. The strongest growth we have seen within IMP in the region East with a double-digit growth. On profit, we can show a nice increase for this division. EBITA increased to EUR 102.5 million, which is a profit margin of 14.1%. In 2021, we had generated a profit margin of 13.3%.
Good cross-margin development helped here, also some good operational leverage in marketing and personnel. One-time costs for the division IMP have been similar in both years with around EUR 2 million negative impact. At our division Office Products and Displays. On sales, we grew by 25% in 2022. The organic growth, so excluding the positive currency impact, was also strong with 11.3%. Both businesses, NDS and Display Solutions, contributed with a double-digit growth. We can also report here on a significant profit increase. EBITA grew to EUR 31.3 million, a 9.6% profit margin, versus a 7.1% the year before. This was due to the strong sales development, some recovery in the display business, and also some one-time effects.
Looking at those, we had a positive impact of EUR 2 million this year from the already mentioned release of a tax provision. We had a negative impact of approximately EUR 3 million last year, the year before. Last but not least, the division FoodService for the full-year. Sales, an increase of 28.1%, which then leads to organic growth of 13.9%. That is the strongest growth for 2022 in TAKKT Group. Here, both brands clearly contributing. Hubert even a bit stronger than Central. Profit also increased, EBITA to EUR 19.7 million, a 6.9% profit margin. The year before, we had generated 8.3% profit margin.
We had a lower gross margin here for the full-year with some challenges with our inventory level at Central, resulting in some negative impact on the margin. We had talked a bit about this in our Q3 call, so no surprise here. We have some negative impact on those one-time effects, around EUR 1 million. Outside of or excluding those two impacts mentioned, the profitability would have been increased. Now looking at TAKKT cash flow in 2022 for the group. You see a very similar increase compared to our EBITDA development, with some higher costs and financial results due to higher interest costs and also a bit higher taxes, but no further big news here. A nice improvement. This is also reflected in our further cash flow generation. Let's focus here on the full-year, 2022 first.
We generated a free TAKKT cash flow of EUR 70.4 million. We have invested for the full-year in our net working capital by increasing our inventories, especially in the first half of the year, to be able to deliver to our customers despite the disturbed supply chains. We also have more receivables following the growth we have generated. Our CapEx level for the full-year 2022 was comparatively low, as you can see. You can also see in the already displayed first half and second half figures here that we have generated our free cash flow completely in the second half of the year 2022. This especially due to the fact that after investing in inventories in the first half, we were able to realize significant improvements in the second half.
We managed down our inventories again significantly, with now global supply chains being in better shape again. In total, again, very good cash flow generation for the group, and especially very strong recovery in cash flow in the second half of the year. The continued cash flow strength brings us also to a very solid balance sheet. Net financial debt continues to be at a low level with EUR 170 million. Equity ratio already mentioned by Maria above our target corridor of 60%, which then enables us to continue our attractive dividend policy and also gives us room to invest in M&A. Before I hand over back to Maria, my summary on the figures. As expected, we have seen slowing down of demand in Q4 and also a lower profitability with some temporary negative impacts, which we do not expect to continue.
Secondly, the full-year 2022 was successful despite the difficult circumstances we were in. Thirdly, we continued to be cash strong, which also allows us then to pursue our attractive dividend policy with a dividend of 1 EUR per share for 2022. With that, I hand back to you, Maria.
Thank you, Lars. Let's have a first glance into 2023. Let's start with our interpretation on how we see the economic environment. We see a high degree of uncertainty. We see a lot of moving parts. The economic forecast are currently quite volatile, as we all have seen that in the recent weeks. Currently, when we look ahead, these are our main assumptions. We might have seen peak inflation, but we believe it will remain an important topic also in 2023. The economies in both Europe and the U.S. are facing a lot of headwinds. We see that despite the economic slowdown, labor markets will continue to be tight. One positive news, product availability is no longer an issue. We see no restriction from that view. That's our view of the overall economy. What does that mean for us?
This uncertain environment means we have to stay flexible. We have to adjust. We have to adjust our pricing and our spendings accordingly to the changing demand and to the changing conditions throughout the year. We are prepared for that. What we expect is a slow start into the year in sales and then an improvement in the second half. We think the product prices will continue to rise and that pressure for wage adjustments will also be there. Our focus definitely is first item on the list, and one of the top priorities is gross margin, so gross profit. We will continue with inflation management and pass on price increases, but we will also manage sourcing for both, not only for products but also for freight.
We'll make sure that on the pricing and discounting, we have a tight approach and, therefore, these measures we expect positive contributions. In this environment, we will be very conscious about our cost base, and we will manage spendings and hiring tightly. If the environment improves, we are flexible, and we will adjust accordingly. We will continue with a clear focus on cash generation, and we will further work on reducing our inventory. All in all, we don't expect an easy year ahead of us, but I'm very optimistic that we can show, as we did last year, that we deliver a good performance. We will also keep focused on our strategy on the transformation of OneTAKKT. I would love to give you a more detailed update on that in our analyst call on March 28th.
Let me summarize now what you have heard today. Four key messages. First, we had a successful 2022. We delivered on our goals. Second, we have a clear vision and a strategy which we will continue to execute in 2023. Third, for 2023, we have clear priorities, which we will detail also in our call on March 28th. As I said, cross-margin and cash management are key issues for us. Finally, number four, you can be sure we remain committed to deliver shareholder value as you have seen it with our dividend proposal. That's it from our side, and I think we are ready for Q&A.
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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are 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. The first question is from the line of Craig Abbott with Kepler Cheuvreux. Your question, please. Mr. Abbott, please unmute your phone locally.
Okay. Can you hear me now?
We can hear you now. Yes.
Okay, great. Sorry about that. Good afternoon, everyone, and thank you, Maria Zesch and Lars Bolscho, for your presentation. My first question is actually just a small bundle of questions on the strategic transition costs. Unfortunately, my line connection during part of the call was not so good. I wanted to confirm that you did say, Lars Bolscho, that the total strategic related costs were EUR 11 million. I wanted to know if you could give us an indication how much roughly of those are like sticky costs that increasing staff or whatever they will stay, and how much maybe one-off. I assume these were fully expensed in the EBITDA. I was wondering, I know you're going to give us more detail in March, but do you have any indication for these costs for 2023 and 2024?
I just have one quick follow-up on a different topic after that, and then I'll cut off. Please.
Good. To, hi, Craig. To the question of the traditional costs.
Yeah.
For this year. We have two buckets there we look at. The first one is the EUR 11 million, which I mentioned, which is like for building up competencies with certain personnel driving projects. That would be EUR 11 million. We also had one-time costs related to changes of our organization of EUR 5 million. That was in total then EUR 16 million. At that earlier last year, we had talked that this could be an amount up to EUR 20 million in total. We ended up with EUR 16 million. Looking at this year, we would expect that in total for both buckets, we could end up on a similar level or slightly below that. For 2022, it is a bit too early to say that probably lower number than again.
Okay. Those costs are all fully reflected in EBITDA, correct?
That's correct.
Okay. Thank you. My second and last question now is, I know, you know, you walked us through what you're expecting for this year. Thank you very much for that, and we appreciate there won't be a guide before March. I just wondered if you could give us a at least qualitatively indications for each business unit of the kind of recent trading trends you've seen so far in 2023. Thank you.
Craig, good to hear you again. Current trading is what you are interested in. Let me formulate my answer to that question like that. I would say that we expected a slow start to the year, and this is also what we are seeing in current trading. Compared to Q4, it's somehow slower at the moment. This is mainly because the U.S. activities are now more in line what we see in Europe. I would say let's deep dive here in March.
Okay. Okay. Thank you very much.
Thank you.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by one on your telephone at this time. The next question is from the line of Thilo Kleibauer with Warburg Research. Your question please.
Yes, hello. Good, good afternoon. Two or three questions. The first one is on the gross margin weakness in Q4. I mean, you mentioned that it's mainly due to the valuation impact, maybe you can give us a kind of split up. You also mentioned the effect that the larger orders at Temple. Which effects were behind the significant gross margin decline in Q4? Should we also expect similar effects in the current quarter, or was it just a Q4 issue? Secondly, just a question, the integration of the stronger focus and the integration in the U.S. could serve it.
Maybe you can give us more insights here about the time schedule and what you are planning there completely. Regarding the integration of KAISER+KRAFT and ratioform, have you now achieved the level which you wanted that ratioform is a kind of sub-brand of KAISER+KRAFT, or are there changes which are planned to come up in the course of this year? My last question would be regarding M&A.
I know it's always difficult to discuss the before timing, but maybe you can give us some comments where you see, yeah, best possibilities in which regions, which are your key segments that you are going to do acquisitions? Thank you.
Yes. I would start with your question around the gross margin for the fourth quarter. Yes, we have seen a decline compared to the quarter four 2021. As I said, 0.6 percentage points was coming out of that really technical impact of inventory valuation, because last year, you know, 2021, we had decreased the interest rate we used at that time, adjusting to the interest rate level. Now in end of 2022 we have increased that. 0.6 percentage points coming out of that. The other two impacts I mentioned for freight costs and for project business, probably for tactical level than in a similar size. The big question, the important question, of course, is how do we look then at gross margin for 2023?
There we feel comfortable that we can get back to the 40% level we are targeting for, and also we are seeing like first, let's say, good development starting into that year to get back to that level.
Mm-hmm.
Let me then come to your second question. It was about FoodService and how you, where we are in terms of the integration, respectively the time schedule. That's what you asked, I believe, right?
Mm-hmm. Yeah.
What we communicated in November that we're going towards the integration. What I can tell you is that we are already integrated in areas like finance and HR. Also, we have integrated teams in some go-to market functions like marketing and e-com, and the integration of other functions will continue throughout the year. Key topic what we also did in order to focus on the growth is cross-selling. We started that in some areas for some specific customer segments, and we see very good results. That was the second question you asked. You asked a question about KAISER+KRAFT and ratioform. You might have seen it. We have an endorsed branding. We will see on the KAISER+KRAFT homepage, the partnership with ratioform.
Vice versa on the ratioform page, you see the partnership with KAISER+KRAFT. That's a intermediate step towards an even more integrated approach between these two brands. More to come mid of the year.
Mm-hmm. Okay.
Yeah. Your third question was about M&A, if I remember correctly.
Mm-hmm. Correct.
Where do we want to invest? Key focus here is on Europe and the U.S. We are looking for targets which can, you know, keep the very good fit and an addition to our existing activities. We're looking for targets within the divisional setup we are in. This could be in Office Furniture invest. We also want to add companies, quite important, which help us to broaden our range of products or services. I give you one example. For example, a company which has recurring revenues due to service components, that's what we are interested in.
Okay. Thank you very much.
Thank you, Kleibauer .
The next question is from the line of Jie Xu with Berenberg. Your question please.
Hi. Thank you very much for taking my question. and thank you very much for the presentation. just a couple of quick ones from me. I would like to have a bit more clarity and insight on the main reasons for exceeding the EBITDA guidance given earlier this year of between EUR 120 million - EUR 130 million. Also a bit more insight into the differences between U.S. And Europe in terms of top line growth in Q4. Thank you very much.
I would start with your question on the top line growth in the fourth quarter. Overall, at that time, the economic environment in the U.S., especially when we were heading into this fourth quarter, was still stronger. So that was helping them our U.S. business. Of course, there are also some minor topics in there, but that was like the big or main reason for us in the U.S. to grow stronger. On your question on the EBITDA and the comparison to our range, I would say, well, first of all, of course, great, and we have achieved the safe growth as we had, like, forecasted in this difficult environment. That was like the key success factor. Now to one more technical part that helped us.
I mentioned that we were benefiting from translating our U.S. dollar business into euro. That was helping us for the full-year by approximately EUR 7 million. That helped us of course in getting like in the upper range of that. I'd also mention that on the one time effects, we came out a bit smaller, a bit less one time impact for the organizational changes, which was also good news for us. That brought us above the under EUR 13 million.
Thank you very much. Just to follow up on an earlier question by Mike, how should we understand the FY 23 outlook that you've given us? Thank you.
As I said before, you know, we will give you a more detailed outlook in March. Looking forward to get this question again on March 28th at our another call there. I can just say what we see at the moment is that we expect a challenging first half of the year because of the economic headwinds in our core market, in this environment. As we are a cyclic, we have a cyclic business, it looks like, you know, that the first half year will be tougher than the second half of the year. That's what we can see at the moment, or that's what we expect. I think we are very well prepared for all options.
We remain very flexible, and we are prepared, you know, for whatever we see in the market.
Great. Thank you very much for answering my questions.
Thank you, Jie.
There are no further questions at this time, and I hand back to Maria Zesch.
Thanks for your interest. Thanks for your interest in TAKKT. We appreciate that. We would love to invite you to our next call on March 28th, where we give you more details about the priorities of 2023, but also about our guidance. Looking forward hearing you there again and, yeah, see you then.
Bye-bye. Thank you.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.