Welcome to this webcast presentation for Etteplan's financial statements for 2023. My name is Juha Näkki, I'm the President and CEO, and at the end of the session, we will have a Q&A, and there you will be able to ask questions from myself and also our CFO, Helena Kukkonen. If we look at the contents of this presentation, so as per the previous times, we'll look at the highlights of the year, have a little bit of an overview of the year, and then go a bit more detailed to Q4. Then look how we did against our targets and to end the presentation, talk about next year and give the financial guidance for 2024. Then, of course, the Q&A session.
But if we start from the highlights, so on the positive side, despite the market conditions were difficult and very difficult to predict during the year, we still managed to grow and even grow organically, which was a good achievement. We did need to take adaptation measures across our businesses during the year when the demand situation was fluctuating and changing, but we were able to improve and recover the profitability of some weaker performing businesses, this was successful. Operating cash flow was also good throughout the year and improved significantly compared to last year. And out of our three service areas, Engineering Solutions service area was performing well throughout the year, and the profitability was solid through the entire year.
And in the fourth quarter, even excellent profitability in this service area. On the negative side, we fell short of our expectations on the profitability, and we did have the weaker market conditions, and the fluctuating demand had an impact on our service areas. In Q2, we had a lower profitability or a modest profitability in our Software and Embedded Solutions service area, where the demand situation quite rapidly came down, and we needed to adjust for that.
And then in Q3, in the beginning of the year and especially in Q3, our Technical Communication Solutions service area profitability was weak, but there also, we were able to recover in the fourth quarter, which was positive and gives a positive momentum for the start of this year. In Q4 also, we were expecting to have a slightly higher result, but unfortunately, the sickness-related absences and also vacations around Christmas were considerably higher than what we had anticipated. And for these reasons, we did not meet our financial guidance and needed to issue a profit warning in January.
If we then look a little bit more in detail on the operating environment, so of course, the uncertainty is still there, definitely, and the war in Ukraine, the situation in the Middle East, these are all causing unease to the market, and we can clearly see geopolitical tensions in the market and affecting demand. Also, the rising interest rates and the higher interest rates have had a clear impact on our customers' willingness to take investment decisions, which has delayed projects and delayed decision-making, clearly. And this has also had an impact on the demand in certain customer segments.
Investments related to Green Transition, to defense, and energy in general have, however, been quite good, and there the demand has been fairly okay throughout the year. But if we look at the situation right now, so towards the end of the year, the market demand was declining a little bit overall, and the year 2024 will begin in a slightly more difficult situation than what we have had during the fourth quarter and overall last year. If we look at the main markets per country, so in Europe, the demand situation was relatively the same in all countries as described earlier.
There were slight differences between countries, depending on the sort of industry structure. So the ones that had more in the latter part of the year had more sort of like Finland; we have more investment-related goods in our industry, so these were coming down a little bit more. And in the middle part of the year, the consumer product parts were coming down a little bit more, which is, for our business, means a little bit more Central Europe. But overall, the situation in Europe was relatively the same in all countries. In China, clearly, the demand has been weaker last year. Western investment levels in China are clearly lower than they have been, and we see that partly manufacturing is shifting out from China.
Our customers are moving their production outside China, which is having an impact on demand. Our efforts in China are now focused on the local China business, which we feel can be stronger during this year than it was compared to last year. If we look at the key figures then, revenue growth was 2.8% for the full year. EBITA EUR 30.9 million, slightly negative, -8.9% compared to last year. EBIT was at EUR 25.5 million, -10.8% compared to last year. Earnings per share at EUR 0.66, which is a drop from last year of about six cents, sorry, seven cents.
Also the proposal for the dividend from the board of directors is EUR 0.30 per share. If we look at the revenue and personnel split by service areas, so Engineering Solutions represented 56% of the revenues in 2023. Software and Embedded Solutions, 24%, and Technical Communication Solutions, 20% of the revenues last year. Revenue by areas of Finland, 51%, Scandinavia, 24%, Central Europe, 22%, and China, 3%. And then, personnel by area: Finland, 50%, Scandinavia, 19%, Central Europe, 22%, and China, 10% of our personnel. So China clearly is slightly dropping, whereas Europe and countries in Europe are increasing, especially in Central Europe, where we have made investments.
If we look at the revenue by customer segments, energy and automotive and transportation, where the electrification is driving demand, these were the ones where the proportionate value is clearly growing. Others are fairly stable, lifting and hoisting chemical industry, ICT coming slightly down. If we then go a little bit more in detail into Q4, on the key figures, slight growth in terms of revenue in Q4, but also in the full year, but a slight decline then in EBITDA and EBIT and also EPS. If we look at the revenue a little bit more in detail, revenue in Q4 was EUR 95.2 million, and at comparable exchange rates, that meant 6.5% growth.
Organic growth was at 0.5%, and for the full year, growth was at comparable exchange rates 4.7%, and organic growth was 0.5%. Of course, for us, the Swedish crown having the biggest impact on the sort of exchange rates. Of course, demand situation was weaker in the fourth quarter and continued to weaken from the third quarter. And we can see the sort of declining demand also in our key account revenue. So in Q4, the decrease was 4.8%, and the decrease in key account sales was 1.2% for the full year.
So clearly, demonstrating the fact that, some of our customers and some of our segments were clearly going down, during the year. In Q4, we also had, as I mentioned earlier, we had these kind of sickness-related absences and then higher than expected, amounts of holidays around Christmas, and this was a fairly hefty amount, about 30,000-40,000 hours, more than we had anticipated, and this led to an impact on the revenue side and also on the profit side. Outsourcing agreements that we managed to sign during the year and also acquisitions, we made two acquisitions, during last year. They supported the revenue growth.
If we look at EBITA, so EBITA was at a fairly good level of 10% for Q4, and the non-recurring costs were minus EUR 0.2 million. And for the full year, we were at the 8.6%, so clearly below our target levels. So this we cannot be satisfied with, but still, we showed through the sort of adaptation measures that we had taken to adjust some of our businesses for the business climate, the adaptation measures worked, and we were able to have a decent profitability or even a good profitability in Q4. But, as mentioned earlier, so the same things has affected the revenue.
So, we did have the sickness and holiday-related issues, and on top of that, we had a slight correction in some cost bookings that had an impact, small impact on Q4 numbers as well. EBIT was at EUR 8.2 million for the quarter and EUR 25.5 million for the full year. And the amortizations in the fourth quarter were related to acquisitions. They were EUR 1.4 million, and for the full year, the amortizations were at EUR 5.3 million. Earnings per share for the last quarter was EUR 0.24 , and for the full year, EUR 0.66 . And of course, the lower profitability compared to last year, and also considerably higher interest costs on our loans had an impact on the EPS.
As mentioned before, the board of directors' proposal for dividend is EUR 0.30 . Cash flow was strong throughout the year, and in Q4, EUR 12.6 million , and for the full year, EUR 35.6 million , so a clear improvement compared to last year. Also, cash flow after investments was clearly stronger than it was last year. Personnel amounted to at the end of the year to 3,902, so a slight negative turn of 0.7%. Basically, during the year, in the uncertain market condition, we were not recruiting as much as we did in the previous year.
So we have slowed down the recruitment effort to match the market need at the moment, but we are still running an efficient recruitment engine. So once the demand starts to pick up, we are in a position to accelerate fairly fast and increase the number of personnel once the turn happens. And the number of employees outside Finland was at 1,965. T his is an increase compared to last year, and this is due to the growth of business outside Finland and the acquisitions that were made in Sweden and also in Germany. If we then look at the service areas a bit more in detail, so Engineering Solutions had a strong year overall.
We had in Q4, the revenue at EUR 54.6 million, so growth of 11.7%, which was good. And also throughout the year there was growth of 10.2%. There was a slight impact on the growth, from the fact that we did transfer about EUR 5 million of revenue from the Software and Embedded Solutions service area into this one. But still, there was growth and this was coming from mainly the outsourcing agreements and good performance in the first part of the year. In the second part of the year, the demand was coming down as our customers sort of delivery-related project engineering decreased, and the market situation did come down.
Also here we have had to implement certain adjustment measures for our business, but still, we have been able to perform well. The operational efficiency has been high, and especially in Q4, the profitability was really good on an excellent level, and even throughout the year, the performance was very solid. The Software and Embedded Solutions service area revenue came down by 6.9%, and the EBITDA was at 9.6%. And here, the market situation remained challenging. There were some hopes that the market could start to recover in Q3, but this has not really happened.
There are certain things that are moving a little bit forward, but there is a little bit more of a waiting mode in this area as well. So we do see a lot of opportunities in projects, but the decisions to start projects are still not made, so the market situation remains challenging. We have implemented adaptation measures during the year, which have worked, and we have been able to improve profitability clearly from a slightly worse Q2 in Q3 already, and this continued also on a solid level in Q4. However, in this service area, the sort of sicknesses and the holidays around Christmas had maybe a slightly more or bigger impact than in the other service areas.
Of course, when looking at the revenue numbers, we need to take into account also the fact that EUR 5 million was transferred into Engineering Solutions from the beginning of this year. In Technical Communication Solutions, the revenue was slightly increasing by 0.9%, and for the full year, 0.2%, so fairly flat. EBITDA at 9.4% for this quarter, so a clear improvement from a weak Q3. We did take different kinds of measures in different parts of our business to improve the profitability. These have worked, and at the end of the day, Q4 was pretty okay from profitability perspective.
However, we still need to continue measures to adapt our capacity to fit the current market need. So difficulties are still continuing here, but as well. But we are looking at opportunities as well. There are different kinds of opportunities that we see, and as soon as the market picks up, we are confident that there will be good opportunities for us to move forward also in this service area. If we then look at our targets and how we did against the targets, so first of course, we have this hefty growth target of EUR 500 million.
We've, of course, during the period since we set this target, have had a little bit of events in the world, so the target is really, really tough and difficult to get to. Currently, we are at EUR 360 million for the rolling twelve months, so 2023. Revenue outside Finland at 49% for the full year, but already in Q4, exceeding the 50% mark, which was our previous target, and moving forward according to our plans. Managed services share of revenue, we were at 68% for the full year, and operating profit at 8.6%.
So clearly disappointing number for us in this difficult year, but we are taking measures to improve on that and confident that we are able to improve on that next year. And lastly, to the financial guidance for 2024. So clearly the market situation was coming down in the latter part of 2023 due to the uncertainty, the geopolitical events that have taken place, and the tension that is there in the world. So this is clear. However, there are certain areas which we do see defense, energy, et cetera, which are still quite strong, and we do see continuation on the investment levels there. So there is still opportunities for us, even in this market.
We do see that the beginning of 2024 is going to be difficult. Here in Finland, the technology companies have been getting a lower number of new orders in, so this will have an impact on the beginning of the year. As for the first quarter, will be slightly more difficult, but we are hopeful, and according to the market expectations, when the interest rates will start to decline a little bit, then we do feel that our customers will start to move forward with their investments. And we believe that the demand situation, with this change, the demand situation will improve to a good level.
It is really difficult to say when exactly this will happen, but we hope that it happens sooner than later. Once it starts to happen, we do believe that there are plenty of opportunities for us, and we can really move forward in all our businesses. Based on this view, we have given the financial guidance for 2024, and estimate that our revenue will be between EUR 375 million and EUR 415 million. Operating profit will be between EUR 28 million and EUR 34 million for the full year. At this point, I would like to open the floor for any questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Atte Jortikka from Evli. Please go ahead.
Good afternoon, this is Atte Jortikka from Evli. I have a couple of questions. First, on the technical communications side, there was a great improvement on Q3. At least the personnel account was decreased, but what were actually the kind of other measures that you implemented on, on that segment?
Well, we have had certain difficulties with the market demand. We have had certain difficulties with certain customer contracts, especially in Central Europe, and we have had certain sickness-related issues in Central Europe. We have taken a little bit more strict approach on certain things, and we have had done some adaptation measures to our business. But clearly, the main thing is that we have been having higher focus on the efficiency part and improved on that clearly, and for that this reason, we have been able to improve the profitability.
Okay, thanks. You commented on the client contracts that brings me to Cognitas. Is it still actually affecting negatively the segment? There were no comments on that on the presentation, at least.
Yeah, I mean, there is still, we have still some issues with that. We are working on changing these contracts, which are still valid, but we have been able to improve on many accounts in this particular part of our business. But there are still a couple of contracts that are burdening us, were still burdening us in this service area for this quarter, but we are working on it, and hopefully we will get the solutions during the year, or let's say, early part of this year.
Okay. Then on the guidance, could you kind of elaborate on what kind of market environment scenarios are the kind of low range and the top range of the guidance based on?
Yeah. Well, we have now, in the very early stages of the year, completed one acquisition in Denmark, STRONGIT, which is a part of Etteplan from the first of January. So of course, this has an impact on our revenues and also profit, so this needs to be borne in mind. What we do see is that the year starts a bit slow in Q1. This is clear at this point in time. Our customers have received a declining number of new orders, and of course, this has an impact on their willingness to invest, and also on the project delivery related engineering. This is quite clear that Q1 will not be that much fun.
But then we do anticipate that at some point in time, the confidence from our customers and their customers also will rise, and investments will start to take place, which should improve the demand situation. The sort of on the low range and the high range areas, the difference will be basically on when will the market improve. If it takes a long time before the market starts to improve, then we will be closer to, probably closer to the lower range, with the sort of business that we have now in place. If the market should start to improve fairly fast, then we have possibilities to be higher up in the range.
Okay, thanks. Then the last one. I think I saw on the financial targets for 2023, 2024, that the profitability target was increased to over 10% EBITDA from 10%. So can you elaborate on what were the main drivers there?
When we did this change, this was in connection to our annual general meeting in 2023. We just wanted to raise the bar a little bit. We were meeting the 10% mark quite consistently in the previous years, and for that reason, we increased the target. We wanted to have a little bit more ambition. And also, when we are moving forward with our strategy implementation, when we are getting more managed services in, and especially when we are bringing in new technology components as a part of our offering, we are able to generate more value to our customers, and then part of that value we can retain ourselves. So basically, these were the reasons.
We were already before meeting the 10% mark, and with the change in our additional value to the customers through the sort of enhanced offering that we have in place. So with that, we do believe that we can improve our margins and meet an even higher, higher profitability target. This year, of course-
Okay, thank you.
Or let's say, let's say last year, of course, we did have difficulties in the market. It was a difficult market with changes happening in different service areas at different times. So last year, unfortunately, we were not able to meet this target, and we are disappointed with that. But, going forward, we do believe that this is very possible.
Thanks.
The next question comes from Emil Immonen from Carnegie. Please go ahead.
Good afternoon, Juha. Emil Immonen from Carnegie. Just a couple of more questions on the guidance. So do you believe you can reach the guidance range without any new acquisitions this year?
Yeah, acquisitions are not included into the guidance, without the exception of STRONGIT, which has been announced already. So STRONGIT is a part of this guidance, other acquisitions, not.
Okay, good. And then, then you still kept your EUR 500 million target. So are you actively looking for some larger moves or what's your thinking there?
Well, we have been actively looking, and of course, now time starts to be quite short. So we've had a difficult year in the COVID year when we didn't grow at all. Last year was difficult, so we are falling a little bit behind of our target. So it's going to be extremely difficult to reach, but of course, we are actively looking for targets all the time. We made the Semcon bid, didn't go through. But still we are active in this area and looking for opportunities. But we will need to be very careful so that we can...
With all the acquisitions that we make, we generate clear shareholder value, and, and this needs to be—this has an impact on what we're willing to do and what we're not willing to do. But, but still, we are looking for also larger targets. That's clear.
Okay, excellent. Then a question on the profitability side. You have a target of over 10%, but then you guide for only slightly improving this year. Could you maybe elaborate on that, why kind of your guidance range here is still going to be, or the profitability is going to be pressured this year?
Well, we have the start of the year is still difficult, and it's difficult for us to say at this point in time that how we are able to move forward. There are fluctuations in demand. There is difficulty in certain markets for us, and for that reason, the guidance is like that. But it gives some room for us around the sort of profitability. But the target is very clear. We aim to have more than 10% in operating or this EBITA, and this is very possible. We have done that before. We should be able to do it going forward as well.
Yeah. Are you seeing any pressure from wage increases or such?
There are the wage increases, of course. We have been fairly good at getting these into our pricing. These are costs that are clear for our customers as well. They have exactly the same cost increases. So in this respect, we have been fairly successful in getting these into the prices as well. But of course, overall, the cost increases in general terms is having a slight impact. We have been able to mitigate that so far, but of course, may be slightly more difficult in a weaker market condition when we're talking to our customers.
Okay, I see. That's all from me. Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Juha Kinnunen from Inderes. Please go ahead.
Hi, this is Juha from Inderes. I have to continue still with the guidance and the growth. I'm just wondering about the outsourcing agreements that you have won. Do they have a significant effect on the growth this year? I suppose it's organic growth, of course, but it's kind of inorganic still.
They do have an impact during 2023, and of course they do increase the number of personnel. And for 2024, we cannot expect further growth from there, but of course, the starting point is higher with the outsourcing agreements. So that's how they play out. But there are opportunities in that area. We are extremely good at this, and we have the right kind of offering for doing these kind of agreements. And we do see quite a lot of opportunities in this area going forward. So hoping to see more of those.
All right. Understood. And also about the client or customer segments. Just wondering about aerospace and defense, I suppose the weight is on defense here. 4% of sales, and I guess it was also 4% earlier, and naturally, there's a huge demand there, but when are we going to see significant rise in this share? Or is it coming this year or is it coming to be even later?
Well, we are seeing clear growth. We already saw clear growth last year in the major customers that we have in this particular area, in defense, I mean. The unfortunate thing is that since it's aerospace and defense, so aerospace has been down and declining, there are certain customers there that have been clearly declining. And for that reason, the sort of aerospace and defense remains on the same level. But the defense customers are clearly growing. We have some major customers in there, and we should expect a higher number during the year. So projects have started, and we do believe that we will be seeing growth during the year.
Okay, this explains it. Thank you. That's all from me.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers.
Okay, thank you very much. And to conclude the presentation. So, of course, last year was, you know, the market conditions were varying a lot. There were different kinds of things affecting the market, and the demand towards the end of the year was slightly declining. So, this was of course a difficult year for us and many others. We still managed to grow. We did manage to recover profitability in the businesses where we saw a decline, and we had good cash flow. We had certain businesses that were running on a good level throughout the year, so there were a lot of positive things.
But of course, growth was slower than we had anticipated, and now, moving forward, we do expect that the market conditions will pick up during the year. And with that, we will be able to accelerate our growth and also improve on our profitability. We are very confident on that. The year, demand-wise, has started a little bit slower. We know this already now, so Q1 will be a bit difficult. But then on, we do believe that there are possibilities for us to improve, and we're very much looking forward to capitalizing on these opportunities. There are also, in Q1, positive things. We are moving forward with our business development, as you have seen in our presentation today.
So we have renewed our brand to reflect better who we are as a company today compared to what we were when the previous revision was made. And with this change, we are also highlighting the potential of the company going forward. We've also made an acquisition in STRONGIT, which will clearly improve our operation in Denmark, so there have been a lot of things happening already, and we are developing our business in a positive manner. And when the market will start to support us, we are confident that we will be able to drive forward as we have done in the past. But with that, I would like to conclude the presentation here. And should you have any questions, so here are our investor contacts.
So Outi Torniainen, SVP, Marketing and Communications, Helena Kukkonen, our CFO, or myself. So you feel free to contact us at any time for any further information on the company. But that would conclude the presentation, so thank you very much for tuning in, and have a great day!