Good morning, and Welcome to Kongsberg Automotive's Q4 Presentation. My name is Mads Langaard, and I'm the head of Investor Relations. With me today, I have our President and CEO, Linda Nyquist-Evenrud, and our CFO, Frank Heffter. Linda, please take it from here.
Thank you, Mads. So I'm pleased to take you through our Q4 results in today's call, together with our CFO, Frank Heffter, as Mads mentioned as well. So let's move to the next slide, and the executive summary. Starting then with the summary in Q4. On our revenues in Q4, we were fairly stable compared to Q4 last year, and ended at EUR 211 million. Though, at constant currency rates, revenues amounted to EUR 220 million, which is an increase of EUR 4.7 million year-over-year. This was primarily driven by the positive development in the commercial vehicles markets in China and in Europe. Our adjusted EBIT came in on EUR 5 million, a reduction of EUR 6 million year-over-year, driven by higher customer reimbursements and retroactive price increases in Q4 last year.
Our free cash flow came in positive with EUR 4.5 million, an improvement of EUR 17.9 million versus pre- versus previous quarter. In comparison with Q4 last year, they were this was a reduction of EUR 84.5 million, driven by the proceeds received from the sales of tangible and intangible assets to BRP end of 2022. In terms of new business wins, we managed to sign a record high amount of EUR 412.8 million of lifetime revenues of new business wins in Q4 2023, which is an improvement year-over-year of EUR 188.5 million. If we move to the next slide, we have the summary for the full year. We are coming off another year in which we faced a challenging market environment. Despite all the headwinds, we continued to deliver on our revised guidance.
Revenues grew by 12.9% at constant currency rates, and excluding the divestment to BRP end of 2022. We experienced growth in the commercial vehicles area above market for the third year in a row, and this was mainly driven by the significant outperformance in revenues in the European truck market. Our revenues included also sustainable price increases, as well as active reimbursement of the increased cost due to volatile prices of raw material, logistics costs, energy, as well as labor cost inflation. Our adjusted EBIT came in on EUR 23.7 million for the full year, an increase of EUR 2.6 million, or more than 10% compared to previous year, excluding the divestment to BRP.
Considering the changing industry landscape and the actions that we took, we are satisfied that the revenue of EUR 885 million and adjusted EBIT of EUR 223.7 million matches the guidance provided in our Q2 2023 presentation. In terms of new business wins, we came in on an all-time high level, amounting to EUR 989.4 million of lifetime revenues, equivalent to 1.1 in book-to-bill. I will get back in a few minutes with further details, both related to new business wins for the quarter four, as well as the full year 2023. Our free cash flow in 2022 included EUR 82 million related to the divestiture of the Powers ports business to BRP, and this is the main driver for the variances in 2023 versus prior year. The leverage ratio, including IFRS, is set to 1.8.
Excluding the IFRS, it is down to 0.6. At the end of the fourth quarter of 2023, the net interest-bearing debt amounted to EUR 100.2 million, which is an increase of EUR 45.5 million compared to year-end 2022, mainly then driven by the decrease of the cash balance during 2023. So let's take a look into the segments, starting with P&C. We can see a revenue reduction of EUR 7.9 million year-over-year to EUR 114.8 million, equivalent to a -6.4%, including negative currency translation effects of EUR 5.4 million. On constant currency basis, Q4 revenues in the commercial vehicle market increased by EUR 11 million year-over-year, which was mainly driven by increases in the Chinese and the European market of EUR 5.7 million and EUR 5.4 million, respectively.
Revenue in the passenger car market declined by EUR 13.4 million on a constant currency base, which was mainly driven by the decreases in China and Europe. Adjusted EBIT amounted to EUR 2.6 million, a reduction of EUR 7 million year-over-year. This was mainly driven by substantial declining sales in passenger car markets in all key regions, resulting in erosions of segments, margin, margins, especially in the Asian region, which could not be fully offset by significantly growing sales in the commercial vehicle markets. In terms of the new business wins, it amounted to EUR 301.1 million of lifetime revenues in the fourth quarter of 2023. And within the quarter, P&C was awarded two significant contracts.
The first one being a business award from China, worth EUR 205 million for our innovative gear control unit that will be used on automated manual transmissions on heavy-duty trucks. The second is our clutch actuation product that gained an award of EUR 32 million from a significant China-based manufacturer of heavy-duty trucks. Moving on to the segment Specialty Products, Q4 ended up with revenues of EUR 96.2 million, EUR 3.4 million, or 3.8% higher year-over-year, despite the negative currency translation effects of EUR 3.5 million. The revenue increase was mainly driven by the growth of the Flow Control Systems revenues in Europe, as well as the Off-Highway revenues in Americas.
Adjusted EBIT came in on EUR 10.3 million, an increase of EUR 3.9 million compared to quarter four prior year, and this increase was mainly attributable to the high sales volume and the positive operational variances. During the fourth quarter 2023, total new business wins amounted to EUR 111.7 million of lifetime revenues. Within the quarter, specialty products was awarded two significant contracts. The first one being a volume expansion to supply fluid transfer assemblies for coolant and fuel applications with an EU-based manufacturer of 4x4 SUV vehicles, worth EUR 34.8 million in expected lifetime revenues. The second one is to supply couplings composite products to a multinational supplier, worth EUR 30 million in expected lifetime revenues. Moving on to our new business wins chapter, and starting with book-to-bill.
As we indicated during our Q3 earnings call, we expected a strong finalization of 2023 and a book-to-bill ratio above one. We closed the year on 1.1, and all-time high bookings of new business. The wins in Q4 was again strongly weighted towards our commercial vehicle and our industrial segments, as well as the aftermarket. But let's move into the next slide to see how the wins are divided per segment and per area. On the left-hand side, you can see the left lifetime revenues already mentioned per segment, and on the right-hand side, you can see that 76% of the booked business is linked to commercial vehicles, followed by passenger car, driven by the new business wins in FCS.
And within the industrial segment, awards include a new product such as UltiPure and UltiFlex, and awards are centrally, regionally in North America and EMEA. Our agriculture and construction, as well as new growth markets, won over EUR 9 million in sales, and the company continues to focus on new opportunities in this important segment. So if we move to the next slide, we can see what products that are driving the booked business in Q4. The highest sales are linked to our gearshift systems for commercial vehicles. As per our press release on December 21st, we have received a business award from China that is worth EUR 205 million for the gear control unit that I mentioned just a few minutes ago. That will then be used, as said, on automated manual transmissions on heavy duty trucks.
The second place, we find our fluid transfer products, driven by the volume expansion that I mentioned before, as well as awards linked to our new industrial products, UltiPure and UltiFlex. Our ABC couplings product continues also to grow, with EUR 41.9 million of awards in the quarter, and this includes then a contract extension, that is with one of our European, largest European manufacturers of trucks and buses, as well as, contracts related to Tier one and the independent aftermarket. If we look at the full year, and the all-time high wins, on the next page, we see then the EUR 989.4 million that we've been, reflecting on already.
Similar to the wins just shared in Q4, our full-year result confirms a strong weighting towards our commercial vehicle and industrial segment, as well as aftermarket and growth markets, representing approximately 75% of our total new business wins in 2023. If we move to the next one, we can once again see that our gearshift systems for commercial vehicles is representing the first place, with close to EUR 400 million in lifetime revenues being booked in 2023. In our FCS business segment, we booked EUR 205 million of hoses and hose assemblies in our core market segments of industrial, commercial vehicle, and passenger car. With our best-in-class couplings range, we booked EUR 92 million in lifetime revenues and opened up new distributors in new geographies such as Africa. We anticipate exciting awards in 2024.
Worthwhile to mention is air suspension assemblies to electric vehicle sector and continued market share growth with our E-actuation product range. Moving into the next slide, I would like to use this opportunity to share a slide showcasing the new business wins life cycle for our industry. What this model illustrates is that from an award of a new business wins until we are in the ramp-up phase, it would take about two-five years. This is on a general basis, valid for both commercial vehicle and passenger car segments.
The ramp-up phase would last for about one year, and the main production period will last for about four-10 years, depending on the program. In terms of our industrial segments and the independent aftermarket, we operate c learly with shorter time frames, and in general, we talk about one-eight weeks of production or off-the-shelf products from receipt of the customer order to the delivery.
If we move to the next slide, I would like to also mention and highlight that we, as of yesterday, March 11th, announced that we had won a new contract for over EUR 22 million for our electric rotary actuator used in plug-in hybrid electrical vehicles. Our rotary actuator, as you can see on the picture, is a compact park lock actuator that can function as a rotary actuator on powertrains. The park lock actuator will prevent the vehicle from moving when you put it into the parking position. It is designed to have a variable torque and speed behavior at a specific position.
Some of the key features that would be worthwhile mentioning is that this product is compact and light, and at the same time, robust with modular design. It delivers premium performance, and it has a high position accuracy. So moving out of the new business wins segment, I would like to give an update on our cost optimization measures. As per our announcement on October 23rd last year, we have launched a cost optimization program in the second half of 2023, which will contribute to the lowering of our overhead costs in 2024. The result of this program is a reduction of about 150 positions, where 40 are being replaced in best cost locations. In total, we will realize a savings of EUR 17 million in 2024, where our EUR 50 million is sustainable.
When it comes to our footprint consolidation, we can confirm the closure of our Tokyo office as per February this year. We expect that all operational measures we have taken in 2023 will improve our profitability considerably in this year. As a reference, we see a reduction of 155 FTE, comparing December 31st, 2023, with end of February this year. As a last slide, before we conclude the executive summary, I would like to make a reference to the announcement made on November 9 last year, confirming the agreement to purchase 100% of the share capital of Skriverform AS. They have served as our trusted partner of choice to our couplings business for more than two decades, delivering injection molding tools. The acquisition of Skriverform represents another step forward in our strategic objectives.
It is primarily motivated by our desire to achieve vertical integration and to gain reliability and better control of our supply chain. This purchase positions us to streamline our operations and optimize efficiency, ultimately benefiting both our bottom line and our customers. We also expect that it will enable KA to build on further in-house knowledge of injection molding tools. So moving into the chapter market update, where we will start with a well-known page describing how the global production for both commercial vehicles and passenger cars is developing. As you can see, both markets are showing a growth development year over year, where commercial vehicles are driven by higher production volumes in China and the European markets, resulting in a 10.2% growth year over year and a 12.7% growth comparing 2023 with 2022.
The global passenger production indicates an increase of 9.1% year-over-year, triggered by growth in all regions except for South America. Comparing the full year, we see an increase of 9.4%, comparing then 2023 with 2022. For completeness, we are also including a market forecast on the next page. On the more long-range perspective, we see a moderate to strong market growth in both segments, where China is the primary driver for the growth in the coming years. The LMC January as of January 2024 report indicate a growth rate of 13%, including China, for commercial vehicles and, within the time frame 2023 to 2027. It also showcases an 8% growth rate for passenger vehicles, including China, for the same time frame.
If we move into the next one, and looking into the KA Q4 performance, within the different segments and regions, we can see that we have outperformed the growth in the CV markets in both Europe and in China, where revenues in China double compared to Q4 2022. Despite the declining market in Europe, we outperformed the commercial vehicle market with an increase of 11.2% quarter-over-quarter. Our sales to the passenger vehicle market declined in Q4, mainly driven by a reduction of revenues to two main customers in the Chinese market. The decrease in the Chinese market could not be fully offset by the increased revenues in the European passenger car market. The increase in other of 10.9% is based on constant currency rates and is excluding the revenues divested to BRP end of last year.
Moving into the next page and the development of the global market situation within the automotive industry. We still see some clouds on the sky, although situation has improved in terms of semiconductor shortages, as well as for the supply chain situation. On the positive side, we see a flattering and or further reductions related to energy prices, and as well as raw materials. On the contrary side, we see increasing labor costs in core markets. In terms of our customer demands, it is worthwhile to notice that we have limited availability to influence the short-term demand, and we are highly dependent on our larger customers' programs. And with that, we conclude the executive summary, and I leave the word over to you, Frank, to take you people through the financial updates.
Yes, thank you, Linda, and, good morning also from my side. Let me share some more details on the financials, starting with the revenues on the next page. Revenues for the quarter came in at EUR 211 million. At constant FX, would have been EUR 220 million, so, 2% growth versus the previous year quarter. When we split the revenue into the market segments, then, the commercial vehicle market revenues contributed EUR 114 million, an increase of 14% at stable currency. While the passenger car market segment contributed EUR 62.7 million, a decrease of 14% at stable FX. The other market segments were, with EUR 34.1 million, rather flattish compared to the previous quarter.
When we look at full year, then the EUR 885 million full-year revenue represent an 8% growth over the 2022 figure, excluding the BRP sales, EUR 818 million. And with this EUR 885 million, we are well within our guidance of EUR 880 million- EUR 900 million of revenue. When we look at adjusted EBIT, on the next slide, then, we came in at EUR 5 million or 2.4% of revenue. Positive earnings, despite the seasonally weaker top line. Again, on the next slide, you see this. Here we go.
and also here for the total year, with EUR 23.7 million and 2.7% return on revenues, we are well within the guidance of EUR 20 million-EUR 25 million adjusted EBIT, and show growth also on that side, compared to the EUR 21.1 million adjusted EBIT in 2022, excluding the BRP revenue contribution. When we look at the segments on the next page, then we clearly see on the revenue side that the passenger vehicle revenue in P&C decline of EUR 13.4 million heavily impacted the quarter. The fall-through on the adjusted EBIT side amounted to almost EUR 10 million.
While the revenue decline could be offset by growth in commercial vehicle and in specialty products, the fall-through was lower from these revenues, especially on the commercial vehicle side, with only EUR 2.8 million, which obviously impacted then the overall quarterly performance. On SPP, it's worthwhile to mention that both FCS, so Flow Control Systems, and our Off-Highway business showed growth and improved earnings. While at the end, we faced the EUR 8.9 million of FX on the revenue side, and also EUR 3.8 million negative impacts from FX and others, leading to the EUR 5 million. When we look at our contribution from our improvement program, Shift Gear, on the next page, then the program delivered according to our plan. Q4 saw the highest contribution on the positive side, with EUR 21.3 million.
While on the negative side, we still faced significant impacts from material cost and also labor inflation. These we obviously will address also in 2024, to see that we can continue to recover remaining items for 2024. The strike in the U.S., to a lower extent, still impacted the Q4, with a slightly lower revenue and contribution. And then, in the fourth quarter, we also provisioned for certain warranty cases that occurred on individual customers in the U.S. But those were more than offset by a positive inventory impact on revaluation. So the net negative impacts of -EUR 15 million led to a net contribution of the Shift Gear program of EUR 6.3 million for the quarter, and EUR 2.8 million for the whole year.
When we look at the net income, then obviously, with the significant charges related to our driveline business, we had to record a loss, which you see on the next page. Starting with the 13.2 million a year ago, which included the gain of the sale of the power sports business and a smaller amount of still BRP-related adjusted EBIT. We have a comparable loss of EUR 18.6 million. The adjusted EBIT in the quarter decreased compared to a year ago by EUR 4.9 million, and then we had EUR 15 million of higher impairment charges, again, related to our driveline business, where we have now impaired all of the related assets globally. There is no risk going forward for additional impairments from this business.
Then we had slightly higher restructuring costs, also related to our overhead optimization program, while net financial items and taxes improved. Taxes significantly improved on the back of a decrease of deferred tax expenses. This altogether resulted in the net loss of EUR 26.4 million for the quarter, and EUR 59 million for the year. It goes without saying that the management is not satisfied with this. On the other hand, we have now taken stringent measures in order to improve the business going forward and to position the driveline business into other operations in order to cash out this commodity business.
When we look at the net financial items development on the next page, then we had to note that the weakening of the Norwegian kroner again burdened the financial result with a net loss of EUR 4.2 million in the quarter. Accumulated over the last three years, we are now looking at a -EUR 6.5 million unrealized currency losses. We will see how this develops going forward. When we look at other financial items, we saw a further improvement here coming mainly from the value of our money market funds that increased in value.
On the net interest side, we saw a rather stable picture, the majority obviously related to our outstanding bond, partially then offset with interest income on our excess cash. When we look at the free cash flow on the next page, we saw a positive EUR 4.5 million free cash flow. That excludes the repurchase of own shares in the amount of EUR 1.4 million. The operating activities contributed to almost EUR 20 million. Investing activities were at EUR 10.7 million, and financing activities amounted to EUR 5.7 million. On this end, currency translation effects were rather negligible. What does this cash flow now do to our liquidity and headroom? You can see it on the next page.
We started the quarter or ended the quarter three, 2023 , with EUR 216.6 million. Then we had the adjusted EBITDA contribution, which was kind of offset by the restructuring and impairment losses, which are non-cash items and offset then in other items. We had a very positive development on the net working capital side, with a reduced inventory, increased accounts payable, and also increased accounts receivable with smaller tax payments. Investment expenditure, like shown earlier, around EUR 10 million, plus smaller investment in other associates, which is related to Chassis Autonomy, and then smaller items on interest. IFRS liabilities, we repaid EUR 3.9 million.
We initiated the share buyback, which reduced the liquidity by EUR 1.3 million, and, again, small amount of currency effects, which then ended the quarter four with a headroom of EUR 219.7 million, consisting of a cash position of EUR 165 million, the undrawn, accounts receivable securitization program of EUR 25 million, and the super senior revolving credit facility of EUR 30 million. On the next page, we have also shown the development for the full year, starting with the ending balance in 2022. I'm not gonna go through all of this now again here. You see in the middle, EUR 2.6 million investment in associates and others. Remember, we have purchased, the 20% share in Chassis Autonomy. That is obviously, accounted for here.
The bond repurchase, which we did in the course of 2023, amounted to EUR 9.4 million, which we repurchased in the open market, and the total amount of shares repurchased throughout 2023 amounted to 3.8 million. Again, we have lowered the amount of the RCF in the course of 2023 from EUR 50 million - EUR 30 million, which again leads us to the very solid liquidity position as of end of 2023, of almost EUR 220 million. Let me continue with some key financial ratios here. The adjusted gearing ratio increased from the 0.8 level in 2022 to 1.8 in 2023. Also, slight increase were this Q3 2023.
Obviously, this is driven by the reduced cash position on the back of the full year negative free cash flow. The debt position is almost unchanged, but with 1.8, we are still well below the 2 x level, so very solid. The adjusted ROCE amounted to 4.7%, including IFRS 16 or 4.2%, excluding, rather stable compared to the previous quarters. The equity ratio obviously decreased on the back of the net loss that was accounted against the equity or the retained earnings. 30.2%, which is still also a very solid position above 30%, but obviously smaller on the back of the losses.
Capital employed reduced further, not only following the divestments, but also, given the impairment of the driveline asset, as well as the improvements on the net working capital side. With this, I conclude the financial chapter and hand it back to you, Linda.
Thank you, Frank. So as announced in our invitation, we have included an extended section into this earnings call, where we will capture both refinancing, our guidance 2024, as well as a new company structure. So let's start with a short throwback of 2023, where I would like to mention our grand opening of the Brzeskie plant in Poland in March last year. The agreement signed in June to acquire 20% of the shares in Chassis Autonomy. The new board of directors elected during the extraordinary general meeting in September, followed by the announcement of the conclusion of the structural consideration of the strategic review in November, as well as the share buyback program.
Additional acquisitions of patents for a camera cleaner developed in Norway, as well as Drive Control Systems business area being formed in December, effective as from January first this year. So continuing on that last note and moving into the next slide, in December, we merged the Powertrain and Chassis segment and the Off-Highway business unit to form the Drive Control Systems business area. On a group level, this means that we are streamlining our operational areas under two business areas, which are Flow Control Systems, also announced as FCS, and Drive Control Systems, DCS. And this is then, as I said, effective as from January first this year.
As a result of the conclusion of the structural consideration of the strategic review back in November, our board and the management concluded that the Driveline business, excluding E-actuators, was not to be considered core business for KA going forward, and will therefore be reported under other operations as from 2024. We believe that this reporting format will give our shareholders a better and more precise picture of the company's profitability, growth opportunities, as well as the development going forward. We remain committed to fulfilling our obligations to customers under existing Driveline contracts, while strategically scaling back our efforts to secure new business within this area. Our focus will shift towards optimizing resource allocation for maximum cost efficiency. We will vigilantly monitor market dynamics, and we will continue to analyze and act according to the development.
So if we move to the next slide, to add some additional flavor to the previous slide, and our decision to separate Driveline and report it under other operations. On the left-hand side, you can see the split in revenues, as well as the EBIT 2023, referencing also the impairment of the Driveline assets of EUR 27 million, a result of the declining revenues. By focusing on KA without Driveline, we, as a group, guide growth in the top line of up to 2%-3% for 2024 for the core business, meaning that we are expecting to outperform the market also in 2024. And this you can see illustrated in the graph that you can see to the right. I hand it back to you, Frank.
Yes, as we are approaching the maturity of our EUR 200 million outstanding bond in July 2025, we are already very active in preparing the refinancing. Earlier this year, we have started to contact banks and to discuss alternatives, and our current plan looks as follows: We want to reduce the amount of bond outstanding or debt outstanding to a level of around EUR 100 million-EUR 140 million. That, again, we want to combine with a revolving credit facility in the magnitude of 20%-30% of the main facility, be it now a bond or be it a bank loan. These are dual tracks, two tracks that we will pursue and then see what is the most competitive outcome for us.
When it comes to the tenor, we are looking at a range of three-five years, probably more in the range of four years plus, so that we have ample time to yeah prepare the next refinancing, so to say. The overall target is that the annual interest burden is equal or lower than today, despite obviously the interest rates being higher than when we issued the current bond back in 2018. We have selected our advisors, and for the bond, which will be a Nordic bond profile. We will mandate Danske Bank and ABG Sundal Collier together as joint global coordinators.
We will mandate UBS in Switzerland here to look at the bank loan option. At the end, we will decide which route to go. From a timing perspective, we want to conclude the preparation latest until May, so that we have an opportunity to benefit from the currently very favorable market conditions prior the summer break, so to go to market in early June. If the market sentiment would turn negative, we would then still have a second window following the summer break in August, September timeframe. Definite target is to conclude the refinancing in 2024, and not get anywhere close to the maturity date in July 2025. Last comment on the share buyback.
It is, like it's written here, a year. It will be a year of consolidation, so there are currently no plans for any further share buybacks. We will close the current 2.5% share buyback still in this month. We are well progressing. And then we will, you know, stop and consolidate. So far to the refinancing. With that b ack to you, Linda, for the guidance.
Thank you, Frank. So moving into our last slide in today's presentation, and our guidance for 2024. In the past, we have focused our reporting and guidance on adjusted EBIT and not EBIT. We believe that the market gets a better and more precise picture of our profitability by focusing on EBIT rather than adjusted EBIT. So therefore, this will be the focus in our communication with the market going forward. We have decided to guide on the consolidated revenues, as well as referencing the split between Driveline and the core business. Revenues are expected in the range of EUR 830 million-EUR 880 million, where core business is expected in the interval EUR 710 million-EUR 740 million, representing then up to 2%-3% growth.
While Driveline is expected to decline from EUR 161 million in 2023 to EUR 120 million-EUR 140 million in 2024. Following this revenue guidance, we are expecting our EBIT in the range from EUR 34 million-EUR 44 million, where the P&C core business is expected to deliver EUR 39 million-EUR 44 million, and Driveline is set to a negative five to zero. This is confirming our previous statement, that we are expecting that all operational measures we have taken in 2023, and now in 2024, will improve the profitability and cash flow of KA considerably in 2024. In terms of new business wins, we are expecting to exceed our 2023 book-to-bill ratio of 1.1, and the lifetime revenues of EUR 989 million in 2023.
We have an exciting year ahead of us, and some of the activities in 2024 that we would like to highlight is the continuous assessment of our manufacturing footprint, execution of our cost optimization program, as well as developing our product portfolio and define key focus areas. We have introduced Hoshin Kanri, or policy deployment, which focuses on strategic planning, that aims to set the high-level objectives, which is then cascaded down to every function in organization. This process aims to get every employee pulling in the same direction at the same time.
Refinancing is also on the agenda, as explained by Frank, as well as the announced Capital Markets Day in Oslo on May 13th. Last but not least, we will continue working on our shareholder structure, where our long-term strategy is to gain a more diversified institutional investor base. With that, we conclude our presentation, and we move over to the Q&A session. Mads, please take it from here.
Thank you, Linda. We can start with one question for you, Linda, again. How are you handling the electric transition in the automotive market?
I would say that we are well positioned. We have, you know, in our existing product portfolio, a good match of products that follows both the internal combustion engine, or IC, as well as electric vehicle and plug-in hybrids as well. In addition, we focus our new product programs towards the electric transition, as well as autonomous driving. Something that is being confirmed by both awards announced as of yesterday for the rotary actuator, as well as our investments in Chassis Autonomy and patents for camera cleaners that I mentioned before, and both being announced then during 2023.
Next question: How do you view the risk of contract cancellations in the passenger car market?
Okay, I would say that, all in all, you know, we have, the automotive, market is somewhat different to the industrial markets, where we then have long-term agreements set between us and the customer. And this is, of course, something that we are honoring from our side, as well as expecting also the customer to honor from their side. And that being said, fluctuations in the automotive industry is something we are well known to, and also then mentioned in, one of the previous slides, where we said that we are clearly then dependent also on the, the bigger customer programs development, something that we are monitoring on a, on a close basis, and on a day-to-day basis, I would say, in the company.
Then there is a question related to the change of focus from Adjusted EBIT to, let's say, real EBIT. I think we've covered that but during your strategic review, you concluded that you will focus on your current business areas going forward. Now we split into core business and Driveline. Are you considering any divestments, for example, Driveline? Can you say something regarding what you expect as net profit?
I think we in the conclusion then of the strategic review of the structural part of it, we were also clear that we would focus on key focus areas in the company. And with also the announcements done today, I think the message is also clear from our side that we don't define the more traditional parts, which is then of products with gear shift systems for passenger car vehicles, cables, et cetera. Sitting then left in Driveline is defined as our core business. So I would say that follows with that decision. We have clearly evaluated options back in time, and that was also part of the conclusion that we announced end of last year. The conclusion were that we were better off considering treating this internally than to look into potential divestments of the Driveline business.
On the net profit side, maybe I take this one. When you start off with EBIT guidance of EUR 34 million-EUR 44 million, and take taxes and interest into account, then, for sure, the target is this year to present a positive net profit at the end, and not come with another loss year.
Very good point.
Are there more contract awards in the pipeline of similar size to the China commercial vehicle gearshift system mentioned, or is this a one-off in terms of quantum? So, obviously, we can't comment on, let's say, potential new contracts, but maybe, we can elaborate a little bit about the, strategic importance, and the, on the product side for this.
Absolutely. And I think also as mentioned then, you know, we are now for the first time also guiding on our new business wins. And as I mentioned, we are expecting then to exceed our 2023 book-to-bill ratio of 1.1, as well as the lifetime revenues of EUR 989 million. What I also mentioned before is that we also see some exciting opportunities then coming up for 2024, related to, for example, you know, air suspension lines for passenger car vehicles, somewhat more of a niched product range, as well as the E-actuator business, similar to what we also announced then of the rotary actuator as of yesterday. And with that in mind, I would say that we have a solid pipeline that we are anticipating for this year. We have high expectations to our bookings being made in 2024.
Thank you, Linda. Will P&C adjusted EBIT continue to see similar negative impacts of EUR 9.6 million from passenger cars in 2024 on a quarterly basis, or have these headwinds washed through the PPY comparisons now?
Maybe I take this one. Obviously, we are expecting the driveline business to further decline in terms of revenue, as the long-term agreements, one after the other, will stop and reach their end of life. Obviously, the comparison of prior year is going to be less pronounced as the previous year numbers are already reduced. Key in this whole phase of the business will be to adjust the cost base accordingly, and reduce the manufacturing footprint so that the EBIT impact is limited to the minimum.
Thank you, Frank. You mentioned having moved 40 positions to best cost locations. Will you proceed to move positions to low-cost countries, and will the headquarters be moved away from Switzerland?
Okay, let's start with the first one then. I think, you know, this is a good example of how we are looking into also what you could define as an offshoring, where we then have been moving positions to countries like Mexico, Poland, India, for that sake. And this is so something we will continue to evaluate, as also mentioned in the presentation, moving forward. So not to put any specific numbers in here, we have the cost optimization program. We have stated very clearly 150 positions, and we are executing on this one, and we are also expecting then a sustainable effect after 2024 of EUR 50 million.
Has the work for shareholder structure already led to promising leads to find lead investor or long-term institutional shareholders?
I mentioned this now in the end of the presentation, and, you know, clearly this is an ongoing work of ensuring then that we have a different structure in terms of the shareholder or a diversified institutional investor base. When that's been said, we know that the company must deliver real earnings improvement before it is seen as an attractive investment case. So clearly, you know, 2024 is now up to proof, and we are looking forward to also then bring a progression throughout the year, showcasing then that we are a healthy company delivering what we said.
There's another question regarding the refinancing. Frank, maybe we can just reiterate some of that. The question is, can you provide more details of the refinancing? Would you consider a combination of bonds and loans?
Yeah, I mean, we are looking at all alternatives, but you have to consider that also a bond needs to have a certain size in order to be attractive. There needs to be volatility, liquidity in the instrument, so that investors buy into it. If you split it into too many smaller instruments, then you likely don't do you a favor. So EUR 100 million size is deemed attractive, and we kind of combine it if we go the bond route with a loan, which is then the revolving credit facility. So it is a combination at the end, but I would not consider now putting another fixed loan elsewhere and go with a banking syndicate plus a bond. That's gonna be either/or, the main facility.
There's another question regarding the shareholder structure. Has there been any indications that the biggest share owner is still committed to long-term strategy? I think we can say that we clearly can't speak on behalf of our owners, so this is a question that must be directed towards them.
Correct.
We don't have any more questions from the audience. So maybe we can give it some couple of more seconds to see if there are any more interest. If not, we will conclude today's earnings call. Yeah, I think we will conclude today's earnings call. Thank you, all, for attending, and welcome back for the Q1 earnings call, the 8th of May.