Good afternoon, everybody. This is Ingo Mittelmeier from Investor Relations. Thanks for joining our call on behalf of the release of our latest business results. In today's call, we will be presenting to you our full year 2022 figures as released this morning. In the next 15- 20 minutes, we will present the most important events for the full year and Q4 2022 in detail from an operational and financial perspective, as well as our guidance for the year 2023. Following this, we will then find sufficient time for a Q&A session. If you're not following today's call via the webcast, the presentation slides are also available for you for download at wackerneusongroup.com/investor-relations. Please note that the entire call, including Q&A session, will be recorded and made available publicly on our corporate website in the course of the day.
Unfortunately, we cannot all hold together today's call together in one location. Our CFO, Mr. Burkhard, is on the phone from Hamburg due to the strike situation in Germany. If there are any problems arising from different volume levels or other issues of technical nature, we would like to apologize for this. I'm now handing you over to our executives, Dr. Karl Tragl and Christoph Burkhard, who will lead you through this call.
Thank you, Ingo. Thank you for the introduction. This is Christoph Burkhard, Group CFO. Welcome to our call, and thanks for taking the time.
Here's Karl Tragl, CEO of Wacker Neuson Group. Welcome everybody to today's call from my side as well. Thanks for joining. Ladies and gentlemen, we all continue to be in very turbulent times, in an environment that is challenging in many respects. Wacker Neuson confirmed its upward trend in 2022, despite difficult political and economic conditions. This result would not have been possible without the dedication of our highly motivated employees all over the globe. Despite the still tense supply chain situation and many more challenges, our teams were able to live up to our ambition of implementing our plans with customers at the core of all activities.
My heartfelt thanks, therefore, go to all our employees for their efforts in a challenging year, as well as to all customers, suppliers, and business partners worldwide who continue to demonstrate their trust in our products and solutions. In the full year 2022, we increased our Group revenue by 20.7% to EUR 2.25 billion above our guidance of EUR 1.9 billion-EUR 2.1 billion. At 9%, our EBIT margin was at the lower end of the expected 9%-10% range. When interpreting our 2022 EBIT margin, the following fact is important to note. As communicated, we had planned in 2022 with an asset sale contributing an extraordinary amount in the very low double-digit million range.
This transaction eventually shifted into January 2023, hence not contributing to the 2022 EBIT, but becoming now part of our 2023 EBIT guidance. My colleague, Christoph, will come back to this topic later. Again, all sales regions contributed to this really good development with double-digit growth rates in 2022. Demand from our customers continues to be healthy, and our order book remains at a high level. We are increasingly adapting our production to the new environment, and in addition, we are better able to pass on increased production costs to the market. However, our performance in 2022 also highlights the fact that Wacker Neuson's product mix makes us much more resilient against economic construction cycles.
This is primarily due to the fact that to a large extent, our machines are used on non-housing construction sites, for instance, in infrastructure modernization, landscaping, and agriculture. We are convinced that this is an important foundation on which the group's growth in the coming increasingly independent from the construction cycle. Now let's take a closer look to the past quarter. We grew by a good 28% in this final quarter in 2022. At 9.4% in quarter four was still below the prior year. In the course of last year, however, the positive trend in our margin development is clearly evident.
This reflects, in addition to operational improvements, the increasing effect of price adjustments made in the first half of last year, as well as contractual dynamic adjustments that enable us to better pass on input cost increases between order and delivery time to the market. Development of our free cash flow is negative at first glance, quite understandable at a second glance. In the full year 2022, free cash flow was significantly below the previous year at minus EUR 131 million. In quarter four, free cash flow was back in positive territory at plus EUR 20 million, still less than in quarter four of 2021. Main reason for this development, as already outlined in the course of the last quarters, has been supply chain problems. This forced us to increase inventory levels.
On the one hand, inventories of unfinished machines are still at high level due to temporary lack of components. Although the situation has already improved slightly since the middle of last year. On the other hand, in times like these, we generally have to maintain higher inventories of production relevant products, parts for ramping up to the continuing growth in the future quarters. At 31.9%, our net working capital at the end of 2022 was correspondingly higher than our strategic target ratio of less than 30%. We are monitoring our working capital development very, very closely. As soon as the supply chain situation improves further, we are prepared to implement actions to get down our net working capital ratio. Wacker Neuson is once again enjoying double-digit growth rates in our sales regions.
Our order book remains at a high level, giving us some tailwind for 2023 and improving continuity in our day-to-day business. Our core markets in Europe continue to develop steadily. With growth of 16%, we generated revenues of more than EUR 1.7 billion in 2022. In addition to the German market, key revenue drivers included important construction equipment markets like France and United Kingdom. The latter one again enjoyed high demand for our innovative Dual View dumper. The Eastern European and most of the Northern European countries also recorded double-digit growth rates. The Americas continued to develop very impressively with a plus in revenues of 40% to almost EUR 460 million. The growth momentum has even increased compared to the previous year.
As a significant part of our growth story, the Americas now account for 20% of group revenue. All sales channels contributed in North America very positively. End customer demand for new machines and rental equipment was high, both among Wacker Neuson dealers as well as independent dealers and key accounts. As part of our diversifying sales strategy, Wacker Neuson was able to attract additional authorized dealers. Once again, business in Canada developed particularly well against the backdrop of a strong residential market. Asia Pacific also shows impressive and stable growth. With an increase of almost 40%, revenue increased to a good EUR 83 million. As in the previous year, our growth in this region was mainly driven by business development in Australia. There, the dealer network was expanded, focus on independent rental companies increased and product portfolio adapted to the local needs.
Business in Southeast Asia and India developed also very satisfying. In the Chinese home market, we continue to face a difficult market environment with high price pressure and a declining construction machinery market. We continue to grow our Chinese operations also with exports into Asia and low regulated markets in other regions of the world. That is from my side. Now Christoph will take you a little bit deeper into 2022 from a financial perspective.
Thank you, Karl. As we have been discussing quarter by quarter throughout 2022, a key theme for us has been striking the right balance between resilience in times of interrupted supply chains and overall efficient working capital management. Against the background of continuously high demand for our products and our strong order book, we decided to build up a certain resilience in our working capital, which would allow us to fill the planned production slots, to generate respective revenues, and eventually to support our profitability. As a consequence, this resulted in an overall net working capital percentage of 31.9% and led to a corresponding effect of increased inventories versus 2021. In addition, our revenue growth in 2022 also led to an increase of trade receivables of roughly EUR 63 million versus previous year.
All this eventually translated into negative cash flow, which is part of the free cash flow of EUR -131 million. Into the increased net debt position of EUR 235 million. A leverage ratio of 0.6 is displaying the continuous solidity of our financials and our equity ratio of 60% at year-end 2022 is complementing the picture, underlining the unchanged strength of our balance sheet. Supply chain management remains a key challenge for Wacker Neuson and the economy in general. As already mentioned, at least the trend is currently pointing in the right direction. As an example here, the freight rates and thus our logistic costs have fallen from their peak levels at the beginning of 2022. The supply chain problem is very complex overall, so disruptions continue to occur again and again.
Nevertheless, it's worthwhile to mention that the number of late deliveries has been declining lately, which is translating in a reduction of unfinished machines. Currently, we are standing at 1,700 in total. As a high-level summary for 2022, I think it's fair to state that quarter by quarter, we were able to cope better with the ongoing uncertainties. At the same time, we all continue to look with great concern towards Ukraine. In addition to the ongoing immense human suffering there, further negative economic repercussions on the world economy, and especially also on the international supply chain, cannot be excluded for 2023. Well, that brings me to our outlook for 2023.
Our high-level planning baseline has been a cautiously optimistic view on the volume and cost side, also based on our strong order book, combined with a careful consideration of selective risk factors allocated over the course of the year. So far, we have started with a positive momentum into Q1, further supported by the mentioned extraordinary asset sale in January, which has been included in our guidance. We do expect a fairly strong quarter one. However, due to the mentioned considerable uncertainties and still looming risks, which could potentially have an adverse effect on markets and supply chains, we have taken a more conservative stance for our planning later in the year.
Taking all this into consideration, our guidance for 2023 foresees revenues between EUR 2.3 billion and EUR 2.5 billion and an EBIT margin in the range of 9.5%-10.5%. The latter including the asset sale in January, contributing a one-off effect of about 4.6 % points to the EBIT margin in 2023. CapEx will be around EUR 120 million, mainly driven by further expansion of our production facilities. Our net working capital guidance remains at a ratio of approximately 30%. We are fully aware that this ratio as per today is a stretch, but we believe that this is a good target level for 2023, and we are fully committed to work towards this target without abandoning the concept of a certain resilience.
With this, back to you, Karl.
Thanks, Christoph. This was the recap of our performance in the past year, 2022, and also our current outlook into the year 2023. As you know, you will hear from us again in only a few weeks' time with our next call about the first quarter results. Now for the next minutes, we are now looking forward to a lively exchange with you. Thank you very much.
Thank you, Karl and Christoph, for the insights into 2022 and current business. Operator, I'm now handing this over to you to explain the Q&A procedure.
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. In the interest of time, please limit yourself to two questions only. 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. At the moment, there are no questions. I hand back to Ingo Mittelmeier. Wait, I'm sorry. We have questions. Now the questions are coming. The first question is coming from Stefan Augustin from Warburg Research. Please go ahead.
Yes, hello. actually I have the two questions. The first one would be on the order intake development. Can you, let's say, outline a little bit what is happening or what is happening in your order book situation? Do you still have a book-to-bill above 1 in the fourth quarter? Is your order book sequentially stable? How far would it reach this year? Total production expectations in 2023 already covered with the order book? That would be my first question.
Yes. Stefan, let me answer this one. You know, we are not guiding and publishing order intake, but nevertheless, let me give you a flavor. Let me start with the reach into 2023. I think, it's fair to say that the reach or the coverage is well going into the second half of the year. I wouldn't like to be more specific, but, it's stretching into the second half. You were asking about the production coverage. Let me put it like that. It is a significant part of the production is covered by order intake, so not fully.
At the same time, I think we are still in a very unusual and also privileged situation for the industry that we have covered already quite a significant part of production. I think it's absolutely unusual that you would look at a complete production coverage for the entire year. As Karl already mentioned in his statements, it's giving us good tailwind. Maybe for the dynamics, because you ask also for the dynamics, we are still looking at good order intake. However, it's not that we have now a further increase compared to last quarter. We have peaked and now we are a little bit below the peak quarter, so to say, but we are still seeing good order intake.
Thank you very much.
Stefan, just Because we're sitting up in the same room, so apologies for jumping back and forth. I would like to add two comments to Christoph's valid points, is we have to differentiate between Europe and North America. North America is still very strong. I was at the CONEXPO show in Las Vegas, and there were increased visitors, increased exhibitors, and a very strong mood. North America is still strong also on the market. The cautious statement from Christoph is more related towards Europe.
There, difficult to really judge whether this is a sign of weakness in the market or whether customers, because of long lead times, they have to wait anyhow for months, so that they just don't wanna shift orders further in the future, so that they are just stepping a little bit back on that. Important point is, it's not we cannot see really market issues there. It can also be ordering behavior, and it's still very, very strong in North America. That's just to add to Christoph.
Okay. Thank you very much for these explanations. The second question is actually rather smaller one. I recognize in the fourth quarter that your margin in Asia is very strong. I just wondered if this is something that I could drive forward, or is there some special effects somehow included in there?
I mean, they had a, they had a good, let's call it like home run in the fourth quarter. I would not necessarily take that now or project that into the new year. Asia certainly has the most difficult market conditions, particularly the domestic market in China. They had the Chinese New Year with quite a big break. I wouldn't extend that into Q1 and further now for the time being.
Okay, thank you very much.
The next question is coming from Alexander Galitsa from HAIB. Please go ahead.
Yes, thank you for taking the question. I'd like to ask a little bit of a broader one, on the margin side, in particular gross margin. When one looks back to the pre-COVID years, since then, you've managed to grow top line substantially by almost 50%. During this timeframe, also the OpEx base was scaled nicely, with only 13% growth. However, on the gross margin side, obviously your gross margin has dropped from 28% now to around 24% in 2022.
Evidently, this is not necessarily the fair comparison, due to obvious reasons, but maybe you could provide us with a little bit of a color in, understanding how much of the margin dilution can be really explained by, basically price pressure to remain competitive, and how much of that is of a more transitory nature that one could expect to level off in a normalized environment.
Let me briefly start with the answer, and then Christoph, you're welcome to add to my comment this time. Basically, there are two effects which we have to be clear about in interpreting figures from pre-COVID to today's situation. Because what has changed is on the one hand, the material cost inflation, where we are running behind with our sales cost increases. This is something Christoph explained in detail. This is part of the effect. The second part is, if you look into operational numbers like first pursuits and stuff like that, we are still struggling with what Christoph and me call temporary supply chain problems or once in a while, missing parts. There's still a lot of rework, inefficiencies and all that.
Production was much smoother before COVID, compared to today's disruptive times, where we can cope with it very well, as hopefully see on our growth figures. This is still giving us some traces in our gross margin. How much and how fast that's gonna come back, that's really depending on how much or how fast supply chain situation is really normalizing. I know that many companies are today talking about supply chain problems, and many people can't hear it anymore. Also the parts are coming. They are still not coming within a three days timeframe as in the previous time.
We are happy if we sometimes get a part after two weeks so that we can finish the unfinished machine, which would be counted then as not a big supply chain problem. It's a different operation where you can plan with a three-day accuracy, frozen zone or where you have to plan with two weeks. Those two effects, material cost increases and the operational inefficiencies going along with that. Part or most of it, hopefully, will come back. We're working very hard on that, but we cannot really predict how fast supply chain gets back to before pre-COVID times, where just in time supply chains were working very nicely with delivery accuracy of ± three days.
Thank you. That's helpful. Yeah, sorry, go ahead.
No, no, it's okay. Does it answer your question, Alexander?
Yeah, it does. To summarize, basically what you're saying is that there should be no reason why gross margin should not trend towards 27% range. In this, in this range.
Yes. If supply chain comes back to pre-COVID situation.
Yeah, that's understood. A smaller question on movement in cash flow statement. In the fourth quarter, there was an item called additions to consolidated structure. Could you provide any color to that EUR 22 million cash outflow related to additions to consolidated structure?
Alexander, now you got me on the wrong foot.
We can catch up later on that. It's no problem.
if that's fine for you, I'll give you-
Yeah, absolutely.
I'll give you the information right afterwards, yeah?
Yeah, that's no problem. Then lastly, could you tell us what division the sale of IT was booked in? Is it Europe?
The division is Europe, yes.
Yeah. Okay. Thank you.
Again, from my side, the question, are there any further questions at the moment? Just as a reminder, if you want to ask a question, please Press Star followed by one on your telephone. It looks like there are no further questions for the moment. Anyhow, if any further questions should arise, please don't hesitate to contact us from IR. We're always there for you. It looks like we've reached the end of today's call. Thanks again for joining and have a great day. Bye-bye.
Thanks very much. Bye.
Bye.
Thank you. Thank you. Bye-bye.