Dear ladies and gentlemen, welcome to the Uniper Analyst and Investor Conference call, full year results 2023. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions by dialing STAR 11 on your telephone. May I now hand you over to Stefan Jost, who will start the meeting today. Please go ahead.
Thank you, operator, and good morning, everyone. I'm pleased to welcome you to our full year 2023 results. Next to me on today's call are Michael Lewis, our Chief Executive Officer, and Jutta Dönges, our Chief Financial Officer. Mike will start and lead you through our key developments in the past financial year 2023. Jutta will then present the financials for 2023 in more detail and provide an outlook for the year 2024. As usual, there will be a Q&A session at the end. And now, let me hand over to Michael Lewis, please.
Yeah, thanks, Stefan. And very.
One moment, please, while we reconnect our speakers.
Yeah, thanks, Stefan, and good morning, everyone. A warm welcome from my side. Before we go through the presentation, let me spend a few words on Uniper's turbulent development over the past couple of years. As you know, I started my work as CEO of Uniper on 1 June 2023, and I'm very proud that we managed to complete a turnaround in 2023 compared to 2022, when Uniper was on the brink of insolvency after the burden of the Russian gas curtailments. Of course, in December 2022, there was no option left for the German federal government other than to bail out Uniper with significant equity injections. It proved to be the right decision for the gas markets and indeed for Germany's security of supply, and for Uniper, it was the starting point for a remarkable comeback.
Just three months later, Uniper was back in profit and delivered a positive Adjusted EBIT. In the whole period over 2022 and 2023, we managed to secure the gas and also power supply for our customers and partners in every phase of the market development, always honoring our contractual commitments 24/7. Beyond that, in 2023, we did the groundwork for defining and releasing our new strategy in August with a clear pathway to transform Uniper into a greener company over the next seven years. Since then, we've made decisive action to execute our ambitious program with the first successful steps. So let me turn now to slide 3 and the highlights of Uniper's 2023 fiscal year. Our progress in 2023 is well summarized in four dimensions. First, our financial performance, which boosted our financial recovery.
Second, all topics related to the EU stabilization package have, and we've made excellent progress in all of those. Third, our new strategy has set the course for Uniper towards 2030 and beyond. And fourth, we've started to execute our green transition with several key projects. In summer 2023, I said, "Uniper is back," and it's fair to say we kept our promise. After a turbulent time, 2023 was a great and extraordinary year for Uniper, and the financial year 2023 ended with record results, which laid the basis for a strong recovery of our financial position and our balance sheet. We're also fully on track with the EU disposal obligation. In 2023, we sold our participation in the BBL Pipeline, we sold our marine fuel trading business in the United Arab Emirates, and we opened the sales process for our participation in the Latvian gas company, Latvijas Gāze.
Also, we started the sales process for our North American power business, which is already at an advanced stage. In 2024, we'll continue with our obliged disposals, and just recently we signed an agreement to sell our gas-fired power plant, Gönyű, in Hungary. We've also booked a provision for the expected level of repayment obligations towards the Federal Republic of Germany in connection with the state aid granted in 2022 and earmarked the necessary funds to cover that. This provides for the required clarity on Uniper's financial starting position for the transformation journey. At the end of last year, we also reached an important milestone. As you know, the extraordinary general meeting on December 8th approved our capital measures to restructure our equity position.
These measures and a strong operational result for 2023 allow for an offset of our accumulated balance sheet loss of around EUR 24.2 billion from 2022 in our statutory German GAAP accounts of Uniper SE. This is one important technical prerequisite for Uniper to be able to pay dividends again in the future. And on top of that, we've started to execute our own energy transition. In terms of security of supply in Germany and Europe, we were able to bring online the most utilized terminal in the liquefied natural gas sector in Germany in Wilhelmshaven. Let me remind you that we completed the seaborne terminal, the first in Germany, in record time with a construction period of less than 10 months, and by the end of December, we'd imported around 7 million cubic meters of liquefied natural gas.
We're proud that this terminal is making a reliable contribution to security of supply in Germany, and last year it supplied around 6% of total German gas demand. In relation to renewable energies, we're also gradually expanding our portfolio to foster our green power generation. Partnerships play a key role in our growth. For example, in Hungary, we made progress together with our local partner, Callux, in developing six solar PV projects with a capacity of around 300 megawatts, which are expected to start producing green power as of 2026. Another remarkable achievement in the flexible electricity generation to cover peak loads was reached last year. We've taken Irsching 6 in Germany into operation. This is a 300-megawatt flexible gas power plant that serves solely to stabilize the grid and is effectively an airbag for the energy system.
In Sweden, we completed the conversion of two gas turbines with an installed capacity of 126 MW to renewable fuel, which allows for a CO2 reduction from these assets of up to 90%. So we've shown that we can deliver new green renewable projects, we can deliver new flexible generation, and we can convert existing assets into lower carbon assets. Now let's move on to slide 4, which brings us to our 2023 results. As I said before, the full year 2023 ended with outstanding earnings, and we met our specified outlook from October 2023. Jutta will present the full financial details in just a few minutes, but I want to just make a few comments about what these figures mean.
As you can see on slide 4, we achieved an adjusted EBIT of EUR 6.4 billion, thanks to one-off gains from procurement of gas replacement volumes, fossil generation, and strong optimization results. It's important to note that this is an exceptional level, which we do not expect to achieve again at this level in the future. Our adjusted net income improved from a loss of EUR 7.4 billion to a profit of EUR 4.4 billion. In light of normalizing market prices, we expect going forward lower earnings in a post-crisis environment. Moving on, let me switch to the next slide, which gives you a few examples of how our new strategy is reflected within our organization. With 2024, we entered a new phase, and our full focus will be on the execution of our strategy that we announced in August last year.
Our aim is to transform Uniper into a leading provider of green energy in Europe, while at the same time continuing our role in providing security of supply for our customers and for the wider energy system. We will predominantly produce green and flexible power, blend our gas supply with a rapidly increasing share of green gases, and serve our customers with bespoke solutions for their own energy transition. To successfully deliver on our targets, we need an appropriate steering framework in place. As you can see on slide 5, with the start of the current fiscal year 2024, we've adapted our segmentation and one of our two leading financial KPIs. This supports an effective transformation management while at the same time making the change of the earnings composition more transparent along the way.
That means, first, European generation is split into two segments, namely green generation and flexible generation, which reflect the two cornerstones of our growth strategy. The green generation segment includes Uniper's carbon-free hydro and nuclear power generation that accounts for nearly 20% of our total capacity as of today. Our aim is to further expand this share and to speed up the growth of our renewable asset base by investing into wind and solar. The flexible generation segment bundles all generation capacity that contribute to ensuring grid stability and security of supply, and are therefore key components of the energy transition in Uniper's core markets. As of today, these include our coal as well as our gas assets. While our exit path for coal continues, thus the share of these assets in the segment will diminish according to the plan.
One main task ahead will be to transform our existing gas fleet step by step into low carbon or carbon-free flexible and dispatchable power plants. We're also prepared to invest into new net-zero capable and flexible assets at gigawatt scale, as well as in large-scale battery solutions. The right regulatory framework conditions will unlock a huge potential for Uniper to grow. The progress in the so-called Kraftwerkstrategie in Germany is an important step, which needs now to be quickly detailed and put into action. Second, we'll change the name of the global commodity segment into greener commodities to reflect the ongoing transformation there. With our midstream gas business, Uniper remains a reliable gas supplier with our municipal, industrial, customer and industrial customers, and we'll continue to de-risk our gas business model and further diversify the supply of gas.
Furthermore, we're also aiming to increase the proportion of green gases in our portfolio in line with market developments. And we'll ramp up hydrogen activities to become a significant producer of carbon-free hydrogen in the future and explore the potential to convert parts of our gas storage portfolio into hydrogen storage. And in the segment greener commodities, we will also bundle our growing PPA activities, where we made a significant progress in 2023, for instance, with a 15-year PPA with industrial partners in Sweden. We've added an appendix, in our appendix a slide comparing the breakdown of the old and new figures per segment and subsegment, so that you can see exactly how that translates. Reflecting our switching gear for our transformation, we've also realigned our financial steering towards investment mode by choosing Adjusted EBITDA instead of Adjusted EBIT as our leading KPI.
Jutta will give an outlook for 2024 based on Adjusted EBITDA figures for the first time at the end of this presentation. Let me now guide you through our priorities for 2024 on the next slide. 2024 is the first full year of the new Uniper focusing on the execution of our strategy. To set the course for the future, we've outlined our strategic roadmap. First, we work every day to keep the existing business running smoothly and maximize its financial value in order to have the funds for future investment and growth while maintaining our key role in security of supply. We're also actively reducing our risks by improving our optimization strategy and hedging strategies in a volatile and challenging market environment going forward. The recent sharp decline in commodity prices is one example for the challenges we're facing.
For this reason, it's even more important to implement our strategy with full force, in addition to running our existing business, in order to expand our non-merchant cash flow streams in particular. By the same token, we'll execute on our commitments towards becoming a carbon-neutral company. Here, our coal-fired power plants in Ratcliffe in the U.K. and Heyden in Germany, which delivered over decades a reliable source of energy and contributed significantly to Uniper's past success, will finally cease operations in the autumn of 2024. Second, we need to develop our future asset base. As many projects have a long lead time, it's vital to make the right investment decisions at the right time.
We do have a strong project portfolio, but we need to exercise the right options and focus on the right projects that will deliver early returns and ensure that we grow the business over the coming years. Third, it's essential to have the right organization and the best people and processes in place to ensure timely delivery of our strategic targets. We've therefore adjusted responsibilities of the management board members last year, and we're still gradually strengthening our organizational setup below the board level in order to deliver our growth plans. In addition, we're also recruiting a significant number of new colleagues to help us implement new projects and keep running a reliable and profitable business at the same time. Fourth, we're engaging with governments to help shape the regulatory framework necessary to deliver the energy transition in Europe and pave the way for the required new investments.
For example, we've intensively engaged in the discussion on the German power plant strategy, and we're pleased that this has moved forward and has now been announced by the German federal government. And fifth, we're making very good progress in delivering our obligations under the EU state aid ruling. And we're very confident that we'll accomplish all announced divestments by the target date, the end of 2026. And delivering our obligations is a very, very important cornerstone to restoring Uniper's capital market viability. As you can see, we have a hugely challenging year ahead, and indeed years ahead. And delivering our strategy out to 2030 is a marathon, and will comprise a huge amount of effort over a long period from the whole organization.
Let me assure you, we at Uniper, I personally, and all of my board colleagues and senior leaders, are fully committed to making the new Uniper a reality. With these words, I'd like to hand over to Jutta for a deep dive into the financial performance for 2023. Jutta, over to you.
Thank you very much, Mike. On my behalf, a warm welcome to all of you. It is an honor to report such strong operating results in my first financial year at Uniper. 2023 marks the year of strong financial recovery of Uniper. This has been achieved against the backdrop of exceptionally volatile and declining commodity markets in Europe. With high gas storage levels at the end of the year, we fully met and even overachieved the politically set thresholds for Germany and other European countries. At the same time, the value of commercial optimisation of procurement and supply is not really reflected in these physical storage levels. In other words, one can leave gas in storage when being better off buying it on the spot markets and saving the stored volumes when the market really needs them.
Our excellent optimization capabilities are also apparent in electricity generation, particularly in the spread portfolio. Here, the strong optimization of our own power plants led to significant additional earnings contributions. With a reduction in power generation and an improved lower carbon-intensive generation mix away from coal, a greater reduction in carbon emissions comes along. We continue to reduce our carbon emissions from our generation portfolio in line with our strategic goals. The decommissioning of Uniper's Heyden 4 coal-fired power station is now definite and set for September 2024. Let me now turn to our excellent financial results, which were a combination of market-driven tailwinds and many excellent operational decisions in a volatile environment. The Uniper group's earnings, the group's operating result, here Adjusted EBIT of almost EUR 6.4 billion, was in line with the outlook we had given in our nine-month report.
Isolated fourth quarter operating profit was also exceptionally high at EUR 0.9 billion. As in the previous quarters, fossil power generation and gas midstream were the main drivers. After the significant operating losses in 2022, this is an outstanding result for the financial year 2023. The very positive Adjusted EBIT trend was mirrored by Adjusted EBITDA and operating cash flow. The Adjusted Net Income also climbed to a positive record level of EUR 4.4 billion, in line with our given outlook. In addition to the main driver operating profit, a significant reduction in financing interest expense since mid-2023 had a positive impact. The operating tax rate came out at 29%. The published IFRS result benefited from the release of provisions no longer required, as well as from the marking-to-market of derivatives at the reporting date in a commodity market environment with falling prices.
Uniper recognized a provision of EUR 2.2 billion in the consolidated financial statements for the financial year 2023 for an expected payment obligation towards the Federal Republic of Germany in connection with the state aid granted in 2022. Adjusted net income remained unaffected by this provision. More details will come in a minute. On the next slide, I highlight the main drivers for Uniper's outstanding performance. All major business activities contributed to the outstanding results. Key earnings drivers performed well again in the final quarter of our financial year 2023. The segment global commodities, and here in particular gas midstream, was the main contributor to the group's profits for the full year. An excellent operating result of EUR 1.3 billion was achieved, driven by the optimization in the gas portfolio and our storage management.
This was topped by gains on the purchase of Russian replacement gas volumes of EUR 2.3 billion, compared with a loss of approximately EUR 13.2 billion in the prior year. Also, international power in global commodities made a strong contribution to the results, inter alia driven by successful LNG trading activities. In the European generation segment, there were still few signs of the decline in commodity prices feeding through the quarterly results. The fossil power plants secured high spreads thanks to successful hedging and optimization transactions. The most significant contributors to the results in European generation were the U.K. CCGT power plants, as well as the German and Dutch steam fleet. However, as stated before, the 2023 result is an absolute exception, with a doubling compared to the already very good prior year result in fossil power. The tailwind has shifted noticeably to headwinds in recent weeks.
The generation business cannot escape this market trend, even though we will take some of the favorable market environment of the previous year with us through hedged positions. Our outright power portfolio, with hydro and nuclear assets, also increased its profit contribution in the 2023 financial year. The Nordic and German portfolios saw a significant increase in average hedged prices, with slight overall decline in volumes had little impact on our bottom line. This was supplemented by attractive sales on the spot markets. However, much of this support was offset by, again, a significant increase of provisions in our Nordic nuclear business for further hikes in waste disposal and storage costs. Looking at our latest outright hedging numbers, which you can also track in the appendix of our presentation, the outlook for 2024 for the entire outright generation portfolio has weakened slightly compared to the previous quarter.
The positive news to flag is that in all years up to 2026, the hedge prices for our Nordic hydro and nuclear activities are still higher than the average realised prices for last year. Now over to the group's operating cash flow. Operating cash flow for financial year 2023 came in at EUR 6.5 billion. This translates into a solid cash conversion of almost 100%. Most components of the waterfall chart show the usual pattern. Working capital benefited from lower capital tied up for gas inventories due to lower market prices. The item other mainly contains the net impact of the provisions for carbon emission allowances. The strong operating performance also translates into a full revival of the group equity position, as you can track on the next slide.
Following the equity injection by the Federal German government in December 2022, the exceptional high operating cash flow in 2023 was the turbo charge that put Uniper's financial position back on a secure financial footing, something that nobody could have expected a year ago. The equity position at year-end 2023 reflects the already mentioned provision of approximately EUR 2.2 billion for an expected payment obligation towards the Federal Republic of Germany in connection with the state aid granted in 2022. Based on the state aid granted, Uniper is obliged, among other commitments, to pay any potential overcompensation from the state aid to the Federal Republic of Germany. The payment obligation, with a financial amount still dependent on the annual result and adjusted equity position for 2024, will fall due at the beginning of the year 2025 and should be paid from existing liquid funds.
It has been a priority to create transparency for the capital markets over Uniper's clean financial basis, which is crucial for the valuation of Uniper going forward. It is a further proof point that the Uniper management is swiftly working through its agenda in order to reinstall Uniper's capital markets viability. Uniper is now in a solid financial position, as you can see on the next slide. Thanks to a strong operating cash flow, the Uniper group recorded a net economic cash position of more than EUR 3 billion at the end of year 2023. The credit rating agency S&P Global honoured the recovery of Uniper's balance sheet figures, particularly after noting that no further losses would be incurred from the replacement procurement of Russian natural gas. The long-term credit rating of BBB- was affirmed in June 2023, with an improved outlook from negative to stable.
At the reporting date, Uniper had not drawn on its revolving credit facilities from banks or KfW and had outstanding commercial paper of EUR 0.4 billion. The current net cash position is a strong basis for implementing our strategic growth plans from a very solid financial position. The transformation will be accompanied by a significant increase in growth investments from 2024 onwards. Expenditure on investments had not materially increased in 2023. Growth investments accounted for one-third of total expenditure. We are working hard to adopt and optimize the financial headroom and financing structures to future needs and strategic plans. The current KfW credit line expires in several steps until September 2026. At the same time, Uniper will diversify and expand its credit funding base in the coming months to have tailor-made credit structures in place for future investment needs.
We are working with the syndicate of banks to prolong and expand the scope of the current EUR 1.7 billion revolving credit facilities. We also want to position ourselves as a regular actor in the bond market. At the same time, our portfolio will become greener with new investments, so that medium to long-term additional financing options, for instance, green bonds, will also appear on our radar in the future. Now to our new outlook for the year 2024. For the first time, we focus on our Adjusted EBITDA as a new KPI and the well-known Adjusted Net Income. After an extra-extra-extraordinary year 2023, in which Uniper has stabilized, financially recovered, and laid a solid financial basis, Uniper is now expecting lower earnings for 2024, driven by an overall lower commodity price environment.
Concretely, we expect an adjusted EBITDA in the range of EUR 1.5 billion-EUR 2 billion and an adjusted net income between EUR 0.7 billion-EUR 1.1 billion. The range for the outlook reflects a still volatile market environment. Corresponding to our outlook, you find on the right-hand side of this slide the key drivers, which explain the developments from 2023 to 2024. Please take into account that these are our underlying business drivers, and significant intra-group consolidation effects, for example, for carbon, influence the picture. The major earnings drivers are clearly a significantly lower commodity price environment compared to the energy crisis years 2021 to 2023. Our green generation business is expected to profit from solid prices and higher volumes, benefiting especially our Nordic outright business, and the absence of negative one-off effects supports a positive view on 2024.
At the same time, we expect lower earnings in our flexible generation and for our greener commodities segments compared to 2023. Main drivers for lower expected earnings in our flexible generation segments are that hedged price levels in the past will not be achievable again, and an overall shrinking portfolio. For greener commodities, the effect from gas retirement gains will not repeat in the same magnitude, and we are operating in an overall lower commodity price environment, which also impacts our commodities business. However, overall, we still expect a very solid performance for 2024, which takes us very close to pre-crisis levels. And with that positive outlook, I hand back to you, Stefan.
Thank you, Jutta and Mike. We actually can start the Q&A session now, so if there are any questions, the analysts and investors, please go ahead. Operator, I'm handing it over to you, please.
Thank you.
We will begin with our question and answer session now. If you do have a question for our speakers, please dial star 11 on your telephone keypad to enter the queue. Once your name has been announced, you can ask your question. If you're using speaker equipment today, please lift the handset before making your selection. Once again, that was star 11 on your telephone keypad to register for any audio questions. Once again, that is star 11 to register for any questions. It looks like we currently do not have any audio questions registered. Okay, I'm handing back over to our speakers for any closing comments, as we have no questions registered.
Thank you, Operator. It was obviously a very clear report today.
You're, you know, you can always reach out to the IR team directly with any questions afterwards, and then there is, in about an hour, also our press conference. So we are looking forward to keeping up the dialogue with you, but thank you for joining in this morning, and speak soon.
Ladies and gentlemen, thank you for your attendance. This call has now been concluded. You may disconnect.