Ladies and gentlemen, on behalf of the WashTec board with my colleagues, CFO Andreas Pabst and our new CSO, Sebastian Kutz, who are attending with me the annual report and financial year 2022 presentation, I would like to welcome you. As you can see, we are presenting this and other events from now on as live stream. We are broadcasting from our headquarter in Augsburg. I will now give the floor to Sebastian Kutz, who will briefly introduce himself. Sebastian.
Thanks, Ralf. My name is Sebastian Kutz. I'm 43 years old, married, and we have two children. I live in a small city near Augsburg, and I've been with WashTec since 2019 and have been responsible so far for Germany, Austria, Switzerland sales and service as an executed Vice President. During this time, I have succeeded together with my team to increase the profitability of the largest market. Before WashTec, I was working 12 years for the Rational AG in various management positions in national and international sales and marketing. I'm looking forward to the new challenge. Thanks. I will hand over back to Ralf.
Sebastian, thank you. This morning we already had the Bilanzpressekonferenz, our press conference in German language for the domestic newspapers, journals, and tech magazines. You can ask your questions via the chat function. To access this function, please press the simple question mark. After the presentation, we take a short break to compile the questions and then go live again to answer them. Before my colleague Andreas Pabst will present the figures of the business year 2022 and the outlook for 2023, I will give you some update on WashTec and present some achievements of the last year. Finally, we will have the Q&A session with the WashTec board. Let me summarize our mission and business model to take everybody on board. Our mission is sustainable car wash. WashTec is the leading provider of innovative solutions for car wash worldwide.
Our product range comprises all types of vehicle wash equipment, as well as the associated peripheral devices, sustainable wash chemicals, Green Car Care, and water reclaim systems. As a specialist in environment-friendly vehicle wash systems, we work continuously on innovations that contribute to sustainable mobility for today and tomorrow. WashTec also offers comprehensive servicing packages and digital smart service solutions spanning the entire product life cycle, including equipment maintenance, chemicals equipment, chemicals equipment take back, and financing arrangements and operator management. In the ecosystem of innovative and profitable car wash, our digital platform, mywashtec, is the one platform that gives our customer easy access to all relevant insights and enables them to control car wash equipment and their business with highest efficiency. mywashtec provides one phase to the customer and combines all functionalities to satisfy all needs around the car wash business for everyone, everywhere, anytime.
Fiscal year 2022 was a challenging year for us. Nevertheless, we started the year expecting an economic recovery. We thought the COVID-19 pandemic was largely behind us and looked forward to powering ahead. The Russian war of aggression against Ukraine, the threat to energy supplies in Germany and across Europe, high inflation, the zero-COVID policy in China, and the disruption to international supply chains made last year another year of difficult conditions. Our company generated revenue of EUR 482 million, up to 12% from EUR 430.5 million in the prior year. The increase in revenue was partly due to price increases and positive currency effects. Earnings before interest and taxes amounted to EUR 38 million. That corresponds to an EBIT margin of 7.9%, prior year EUR 45.7 million and 10.6%.
This result is in line with our guidance, which we revised in July to reflect economic conditions. The order backlog remains at high level at constant exchange rates. It was slightly higher at the end of 2022 than a year earlier. This ensures capacity utilization for the first few months of the new fiscal year. In general, we observe a slower commissioning and conversion to revenue due to customer delays in the preparation of their sites. Due to the energy crisis and the unstable situation in China, material and freight costs again increased sharply compared to the prior year. The rate of increase was significantly higher than in 2021. We responded with further price increases in our direct sales business and renegotiated existing contracts with our major customers to reflect new conditions. The price increases are taking time to implement, especially in the equipment business.
We faced many different challenges in the equipment business. With a record order backlog, we had to deal with staff shortages caused by an unexpectedly high rate of sick leave due to COVID-19. We managed supply chain disruptions in procurement and throughout the supply chain, and this was only possible through very focused crisis work, which meant significant extra effort of staff. Thanks to the extraordinary commitment of the WashTec team, we were able to quickly reduce all part shortages. Despite the challenging conditions, we maintained our ability to deliver at all times in 2022. As the market leader, we have achieved steady gains in customer loyalty and have been increasingly successful at attracting new customers in recent years. This is an achievement of which we are in management are very proud. We are successful because our primary corporate objective is maximum customer benefit.
This we achieve through superior products, our digital service portfolio, and the goal of providing the most sustainable car wash with our products. In 2022, we released several product innovations and updates that contribute to WashTec's product ecosystem of superior car wash quality, digitization, and sustainability. This ecosystem consists of foiur components: the SmartCare, representing the next generation of smart machines, our Green Car Care chemicals, the WashTec service powered by the remote service capabilities of our digital platform, and the digital products, My CarWash, My SmartSite, My Shop, and My EasyCarWash. We have developed our mywashtec platform into a digital control center for our customers and partners. On mywashtec, all system information can be viewed. Our customers receive premium service with fast response times. They can check every detail of their current service agreements and access our web store.
Over 50% of our chemical orders are now placed through our online store. At the UNITI Trade S how in Stuttgart, we unveiled our expanded SmartCare platform. SmartCare digital car wash offers outstanding washing and drying performance. State-of-the-art control technology enables further significant improvement in washing times. Furthermore, we have added enhanced safety and sustainability features. These performance gains, along with the expanded digital programming and control capabilities, are now available to our key account and direct customers as a scalable platform from high-end to the middle segment. This new machine generation can easily receive applications, updates by our digital platform, mywashtec. Car washing in North America differs in detail from that in Europe. We have successfully adapted SmartCare to take this into account. The first SmartCare systems have been installed and tested at customer sites in the United States.
Water treatment is also important in this market. Together with U.S. customers, we have qualified our AquaPur Modular water treatment product family. This gives us a product with excellent performance characteristics for the U.S. market. As you might remember, we have implemented new processes to achieve conformity with the American UL standard already in 2021. With these processes in place, we can certify other products for the U.S. market more quickly. In 2020, we had a record of worldwide fair activities after two years of COVID shutdowns. Our international lead fair in Europe is the UNITI expo. It took place in Stuttgart. The guiding theme of the fair was with WashTec products and services, our customers are digital, sustainable, successful. You might have noticed we have chosen the same theme for our annual report.
In total, we were pre-present at over 10 fairs, including the ICA show in the U.S., the Autopromotec in Bologna, Equip Auto in France successfully, with representing our innovations, including the SmartCare. Sustainability is an integral part of our business processes. In this context, we initiated our comprehensive sustainability reporting process in fiscal year 2022 and published a voluntary sustainability report, which is available on the company's investor relation website. The WashTec sustainability program provides information on our activities and goals in the areas of economic, environmental, and social sustainability. We have received a great deal of positive feedback, both from our clients and from investment professionals, regarding the transparency and rigorous presentations of our measures in the report. In recognition of this, we won the Augsburg Business School's ESG Company of the Year Award.
We see this as a reward for our ongoing efforts and as an inspiration to continue in the same direction. Our next voluntary sustainability report will be published by the end of the second quarter as last year. With our economic sustainability program, we lead the innovation in sustainable car wash. We are highly motivated to offer our customers solution that reduce their energy costs. We have been able to convert our self-service car wash product, known as JetWash, to cold water operation, thus helping our customers to save energy in car wash operations. This requires wash chemicals that are suitable for use with cold water. Our Green Car Care chemicals range meets these requirements. The initial invest has a payback period less than one year. A great success story in times of energy crisis.
The dry and sunny weather conditions in the South Europe caused an extensive drought in the summer of 2022 and beginning of this year, especially the regional governments in France have forced, in some regions, car washes in a temporary lockdown. Since the cost of water is low, for example, in South European countries or the Netherlands, installation of water recycling or water treatment systems are below 10% in these regions. In the future, the investment in advanced treatment systems will be more and more beneficial, even in countries with low water costs. So far, we considered EUR 4 per cubic meter for a combined water tariff as a break-even point of an investment in water treatment systems, including underground tank camps. These installations can wash a car with approximately 25 liters of fresh water.
This is less or approximately the same as the amount of fresh water used in a modern household washing machine for one wash. The main water volume in car wash is processed water, which is about 85% of the water volume. WashTec has the right products and solutions for sustainable car wash for customer in these regions. We have also made great progress in the development of our data analytics capabilities. This is now a technology topic. Structured data is the key to operate smart services on a large scale. We deployed the infrastructure to set up these capabilities and implement it as a first case wash count analytics. This and other cases will enable us to extend our offers of digital services that help our customers to drive their operations efficiently. Data analytics capabilities is also a key technology to drive sustainability.
Experts call this twin transformation. We have been invited to participate in a study, how companies can master the twin transformation as pioneers. I have included the link in the presentation for your convenience. Last year, we announced our WashTec target to reduce CO2 per million revenue by 30% until 2025 on the base year of 2019. To address the potential impacts of the energy crisis, we have established an energy task force to prepare the company for a range of emergency scenarios. We have also implemented energy saving measures. Most of these we have been able to implement on a permanent basis, reducing our energy consumption by approximately 20%. We executed several initiatives within our environmental sustainability program. One example is the hands-on material project on the optimization of packaging material executed together with the University of Augsburg.
All those initiatives are driven by highly motivated WashTec employees. In our Care for People and Culture program, we have started a new career website and participated at various career fairs. We received a New Work Excellence quality seal for 2022 and 2023. With our diversity program, Respectful Together implemented, we decided also to join the Charta der Vielfalt, the largest employer initiative to promote diversity in companies and institutions in Germany. On behalf of the entire management board, I would like to thank all our employees for their dedication and hard work in 2022. In yet another year of crisis, they have stood with us through challenging times. I would like to thank them for their tireless commitment, which has once again shown me that dedication is a part of our corporate culture. The WashTec team can be relied on, also in times of crisis.
I now hand over to Andreas Pabst, CFO of WashTec, to present the figures of 2022 and the outlook of 2023. Thank you. Andreas?
Yeah. Thank you, Ralf. I also would like to welcome you all. As Ralf already has mentioned, 2022 was an extraordinary year for WashTec. In particular, with the start of the war in the Ukraine and China's zero COVID policy, the company had to adapt to a dynamically changing economic situation with supply chain issues, price increases, and general economic uncertainty. How did WashTec manage this? Let's have a look at the group's results in 2022. WashTec closed financial year with its highest revenue ever. The total figure was EUR 482.2 million, up 12% on the prior year. This was particular due to our own price increases, which we implemented in several steps beginning in 2021. Currency effects also helped, especially in relation to the U.S. dollar. Even without this tailwind, revenue growth would still have been up by 9.1%.
Generally speaking, we are satisfied with this revenue, especially considering the continued high level of the order backlog at the end of 2022. However, we are not satisfied with the earnings before interest and taxes, EBIT. At EUR 38 million in 2022, this was significantly down on the prior year. We were not yet able to pass on the full impact of the rise in material and sourcing costs to our customers by way of our own price increases. In addition, as we focus on the maintaining of our own delivery obligations, we had to compensate for inefficiencies caused by the lack of materials and fitters by increasing our own labor input. This meant we were able to keep up delivery obligations at all times, and according to our data, we gained market share as a result. A further key figure is free cash flow.
At EUR 16.2 million, this was significantly down on the prior year. As well as the lower earnings, this was partly due to a significant increase the net operating working capital. I will go into that later. First, revenue breakdown by quarter. As you know, our business has a degree of seasonality, starting with a weak first quarter and then ending with a strong final quarter. This was basically also the case in 2022. We started with a very positive first quarter. The Ukraine war and the economic impacts that have already been mentioned then slowed us down a little. With slightly longer order lead times of 4 to 6 months, the quarterly increases in Q2 and Q3 were somewhat lower. The final quarter was the best quarter in our company's history, giving us total revenue of EUR 482 million for the full year.
Let's now take a look at the revenue by products. As you see, we generated significantly revenue growth, both in equipment and service, with an increase of +12.5%, and chemicals with an increase of +11.6%. The largest growth was in key accounts. As in the prior year, revenue with one major customer in Europe and North America accounted for slightly more than 10% of total revenue. Direct sales and chemicals revenue also grew. Other revenue accounts for around 1.1% of total revenue and mainly relates to rentals and commission. Let's now take a look at the revenue breakdown by region. WashTec once again generated 3/4 of revenue in Europe. Our year-on-year growth in this region was 6.6%.
The individual markets with the highest revenue are Germany with around 27% of group revenue and France with around 14% of group revenue. Our growth in North America was even stronger. We achieved close to 40% revenue growth in North American market and beat the $100 million mark for the first time. All product segments contributed here. Equipment and service stood out in particular with strong key account and direct sales business. As a result of this growth, our North American business now accounts for 22% of total revenue. Revenue in Asia-Pacific region was slightly down. China and Australia developed in opposite directions. While we generated double-digit percentage revenue in growth in Australia, we saw revenue in China fall by a similar amount, mainly to the Zero-COVID policy. On this page, you can now see the revenue and results by region.
As you can see, EBIT margins are under pressure everywhere. In Europe, the EBIT margin fell from 11.5 to 9.8%, in North America from 5.9 to 1.3%, and in Asia-Pacific to 0.4%. All our regions were impacted by cost increases due to the change in the macroeconomic environment and the delayed effects of our own price adjustments. This means decisive action in 2023. With the product innovation mentioned by Ralf and our focus on efficiency, we are definitely on the right track. This also implies to North America region, where in 2022 we generated positive EBIT only in the final quarter. We have launched a detailed efficiency program here for 2023 and are already in the middle of implementing it. The Chinese market also remains challenging, and we are currently reviewing our market approach here.
Let's now take a look at the earnings in each quarter. Here you can see the quarterly EBIT figures compared to the prior year. In general, we again see the familiar seasonal trend, but the figures are more heavily impacted by the economic uphills in 2022. Material prices increases, less reliable supply chains, and the resulting inefficiencies, both in production and deliveries, had a negative impact on the EBIT margin, especially in Q2 and Q3. Significantly higher outbound rates and travel expenses, as well as higher trade fair costs also had a negative impact. Despite all of this, WashTec managed to increase EBIT and the EBIT margin from quarter to quarter. In the fourth quarter, we were back to the same level as in the prior year.
Over the year as a whole, at 7.9%, the EBIT margin was significantly below the 10.6% seen in prior year. This EBIT bridge chart shows the main earnings drivers in 2022. Based on the higher revenue and with the same margin as in 2021, gross profit should have been up by around EUR 50 million year-on-year. Because of the mentioned inefficiencies in production and material cost increases, it was only possible to increase EBIT by EUR 2.5 million, which can read off here as the sum of the two bars to the right of the EBIT in 2021. Around EUR 7 million more was spent on sales and marketing in 2022. A large part of this was because of the significantly higher freight costs.
The return to normal travel after the pandemic and the number of trade shows appearances necessary for our business also meant that expenses were higher than in 2021. The increase in research and development expenses by EUR 1.2 million mainly relates to the reversal of a provision in the prior year. Taking this into account, the expenses were more or less the same as in the prior year. In currency effects, we had EUR 0.7 million more in the fiscal year. Free cash flow at EUR 16.2 million was significantly down compared to prior year. Aside from the lower earnings before taxes, this mainly due to the simultaneous increase in net operating working capital. As mentioned, a focus in 2022 was on maintaining our own delivery obligations.
To achieve this and to avoid supply chain disruptions as far as possible, we increased inventories by around EUR 14 million. In addition, as outlined earlier, we achieved an all-time revenue record in the fourth quarter and have a correspondingly higher level on trade receivables than we had the prior year reporting date. In total, our net operating working capital came to EUR 105.2 million, which is significantly above the prior year figure of EUR 68.9 million. Sorry, EUR 86.9 million. The net cash outflow from financing activity was EUR 48.5 million, an increase of EUR 9.1 million. This was mainly due to the higher dividend of EUR 2.10 plus the special dividend of EUR 0.8 per share.
For the fiscal year 2022, the management board and supervisory board will propose the annual general meeting an increase in the dividend by EUR 0.10 to EUR 2.20 per share. WashTec will again be a high dividend stock in 2022. At the end of the fiscal year, cash funds stood at EUR -27.1 million compared to EUR +4.5 million as of December 31, 2021. The WashTec Group has secured financing through bilateral agreements with various banks. At the reporting date, WashTec has at its disposal undrawn credit lines totaling around EUR 46 million. Let's take another look at the following key performance indicators. net operating working capital has increased significantly as shown. Note that in relation to the significantly higher revenue, NOWC turnover increased from 20.2% in the prior year to 21.8%.
Return on capital employed went down significantly from 25.8% to 20.2%. In addition to the lower EBIT, this was due to the mentioned significant increase in net operating working capital. The equity ratio was 31.0% at the reporting date compared to 36.9% in prior year. Let's now turn to the guidance for 2023. As with any forecast, the outlook for 2023 is subject to uncertainties that could have a material effect on the planned development of key performance indicators. Particular factors worth mentioning are the war in Ukraine, the persisting high inflation, and the burdens on consumption and investment.
On the one hand, we have implemented several price increases and still have a high order backlog as of the end of 2022. On the other hand, material and energy prices remain high and general economic uncertainty is clearly in evidence. For this reason, the management board and the entire WashTec team are placing the focus for 2023 on further optimizing existing processes and investing in the development of digital solutions and products so as to make significant progress, particularly in terms of profitability. Overall, WashTec expects revenue in 2023 to be of a similar magnitude to the prior year with a significant increase in EBIT. When we say significant increase in EBIT, we mean an increase of greater than or equal to 10%. We also expect significant increase in free cash flow.
The key performance indicator that we use to measure our capital efficiency is ROSI. Here, too, we expect an increase of at least one percentage point. Please let me reiterate that all these figures reflect our expectations based on the current economic environment and do not take into account any major upheavals of any kind. This brings me to the end of my part. Thank you for your interest. I would like to hand over back to Ralf.
Ladies and gentlemen, we will now take some time to take and compile the questions. As I said, you can access the question chat with the question mark, and we will come back in a few minutes with the Q&A session. Thank you very much. We are back. Thank you for giving us in the questions. First question: Following strong growth in the North American market this year, why is it you are not expecting strong overall growth, or do you already see a significant slowdown in the area? Sebastian, you just returned from there.
I was more than one week in North America, actually in Denver. We have a similar situation in North America. That means financing is certainly an issue at the moment. Interest rates are far higher, the same situation, and banks are more and more risk averse. In addition, customers are delaying due to the economic outlook and the risk of recession, especially our bigger key accounts acting a little bit conservative. They are delaying orders. The good news for us is we are not losing any orders to competitors. Especially in North America, there's another impact. The recent adverse weather conditions have also slowed down investment due to much reduced wash counts in key states like California.
In a nutshell, there is a kind of decline in orders, which we can also see in the North America, and therefore, we are not expecting a strong overall growth.
Thank you. Next question. Could you please share your long-term vision for the company and the signposts that you want to be measured by on your way to achieving that vision? Especially, where do you stand in terms of your long-term 2030 vision for Asian markets, as you have stated that you are reassessing your market approach there? I will take this question. We have published our long-term vision last year at the Investor Day, which is growing to EUR 800 million up to 2030 in Europe, U.S. and Asia. The figures for that you can take out of this presentation. Especially when we talk about the Asian market, reassessing our market approach means how we actually interact with the customers, and this is currently under investigation. We have some thoughts about this.
It's, too early, too premature to talk about this. The guidance also implies stable input costs and higher level basic trends in the input cost side. Should one expect easing in the headwinds? Do you see an improvement in terms of input costs? Andreas.
Thank you. If we look at the guidance, then that's true. We have included here high material prices as well as high energy price, because as already said before, material price and energy price, we see that they will stay at a high level. This is included in our guidance. As well, we have included some increase in personal staff increase.
Next question. On order intake, is the order intake from what you can see in Q1 strong enough for the order backlog to grow year-on-year? I mean, we have 1 day to go in Q1, we have not the figures yet, Sebastian.
I can give a short outlook. The situation regarding North America already explained. We have another impact. We placed a price increase first of January, and therefore we generated kind of pull- forward effect as we have always a kind of transition period of four weeks, which we give to the sales people. That means January was very strong in order intake, therefore, we had a expected decline in February. March, the orders are coming back, but not on the level as we would expect. You could say we have a declining orders, as I already stated out. Therefore, the order backlog is melting down a little bit. Everything in a kind of, I would say, expected volume.
The next question, first on revenue growth. I would like to know how much the growth is driven by volume increases and how much price realization are reflected in that. I will take the question. Yeah, that's basically, the volume, machine volume is flat or the same as the year before. These effects come out of price increases and FX, but as we have stated, by a gain in market share. I think we have this question, so this has been handed in twice.
This is the combination. It's similar. Yeah, I think this is similar. We received three other questions by email, which we would like to take in. What profitability measures is WashTec initiating, Sebastian?
Which one here? This. Yeah. Especially in North America, we need to gain more profit. Let me just see. My notes. Yeah, as I was already there, which I mentioned before, is, yeah, we need to become more, gain more profit, as I said. What we have agreed is, we are thinking about to change our commission model because it was so far driven by sales control to a more margin-driven model. Of course, this will take some time, but this is one of the first measures. The other thing is we need to win more direct business orders, as the margin, of course, is much higher there.
To do this, we need to do further develop the efficiency of our salespeople, so that we can achieve more with the existing sales team. To this end, a new coaching process is being implemented that has already proven successful in Germany. This integrates both management levels with a focus on the further development of the first management level. This is the only way to ensure the sustainable development of the sales staff. Of course, this will also take some time, but we discussed everything and got it in line. Of course, especially in the technical service, we need to become more profitable. Here we will change the structures. We will do a centralized dispatching, and we are implementing a tool also in North America, which we have already successfully implemented, especially in Europe, which is called the Service Finder.
Things are already discussed, and I'm quite confident that in the next time we will see the first success.
Sebastian, thank you for your output. We can say, we are back to production efficiency prior to COVID. This basically is a task we do in the supply chain, and all over it's price before quantity, as a company guidance. Of course, the question, double-digit EBIT margin already in 2023. This is an interesting question.
Shall I take it?
Yeah, sure.
Yeah. As I already stated, explaining our guidance for 2023. You know, in 2022, we had 7.9% EBIT margin, and we are focusing now on improving our EBIT. Our statement is that we want to improve the absolute EBIT by 10% or higher. If you take the maths and calculating everything through with stable revenue and a 10% higher number of EBIT, you come around, let's say, 9%, something like that. We all are here working to become a double-digit EBIT company. We have higher costs coming from 2022. We need to get the benefits out of the efficiency programs that is in place and is started, but will it be fully effective in 2023 in a way that we will achieve double-digit EBIT margin?
That is not what we are saying currently in our guidance. Once again, 10% more in absolute number in EBIT is what we are chasing.
It's a little bit too early to know.
Yeah.
Sure. The last question was, it's also interesting question: Does the EU taxonomy help with the sales of SmartCare? As you might know, the Taxonomy Regulation established six environmental objectives, climate-related ones, but also non-climate related ones. The climate-related ones are out in operation and in the, in our report, you will see actually, the tables for those two goals. The non-climate related, where we talk about sustainable use and protection of water and the transition to a circular economy, well, the first reporting will take place in 2025 for the year 2024. Goal 1 and 2 is active, as we said. Goal 3 and 4 and all others are available as draft version and are currently in discussion in Brussels.
Our basic idea is to establish car wash with water treatment as a taxonomy compliant product. I think we have all question done. Ladies and gentlemen, Sebastian, Andreas, thank you very much to all, also to our team in the new setup, for organizing and executing this call. To our guests, please give us some feedback. How do you like the new format? Should we change things? For that, please send us an email to Investor Relations. The email is ir@washtec.com. Thank you very much for your attention, and have a good day.
Yeah. Thank you.
Thank you.
Bye.