Ladies and gentlemen, thank you for joining APF Holdings investor webinar. We will start with company's presentation and continue with a live Q&A session. To join the discussion, please submit your questions through the Q&A window below the presentation. The session is being recorded and will be available for re-watch shortly after the call. Let me now introduce you to our hosts today, Jurijs Adamovičs, Group Founder and Chairman of the Management Board, and Mihails Keziks, CFO and member of the Management Board. Jurijs, Mihails, floor is all yours.
Thank you. Good morning.
Good morning.
Ladies and gentlemen, dear investors. Happy to welcome on our webinar. Today, we're going to go through the agenda that you see on the screen. I will cover the highlights of last year and all the subsequent points up to the industry overview. The industry overview and the financial indicators will be covered by our CFO, Mihails Keziks. Let's start with the 2023 year highlights. If we speak of our key operational and financial results. Last year, we have sold 105 million eggs, which represents a 7% decrease if we compare it to the results of 2022. This is due to the cyclical reduction cyclogram and the change of the flock, which occurred last year. Nevertheless, despite that, we have managed to secure all-time high revenue, which was EUR 13.3 million in 2023.
Although I want to say that this revenue result is lower than the one we forecasted and presented to investors during our IPO roadshow. At the time, the initial target was 9% higher. Nevertheless, the outcome of 2023 is a revenue increase by 19% if we compare to the year before. If we look at the EBITDA, it's also an all-time highest result that APF ever had. Here I'm also willing to make a short remark, that this EUR 2.8 million figure is also lower than we forecasted at the time of the IPO. It's actually 34% lower. Again, it's an all-time high, and if we compare to the year 2022, this EBITDA represents 31% increase. If we look at the gross profit, gross profit is EUR 3.5 million, which is a 67% increase year-on-year basis. Overall, we as the management see this as a fairly good result.
In fact, it's a best ever result APF Group has demonstrated throughout its existence. Next section is regarding changes in corporate governance. Those of our shareholders and investors who participated in the IPO know this. Last year was notable in the sense that we have elected a new supervisory council, which is a very strong supervisory council comprising of high caliber professionals. It is chaired by Uldis Iltners, who is a well-known entrepreneur himself, one of the founders of NASDAQ-listed company, Madara Cosmetics. Deputy Chairman of the council is Ervīns Burlauts, who is a Managing Partner of Sorainen Law Offices, one of the big law firms in the Baltics. We also have Miguel Jordao, who is a London-based investment banker, and Aleksandrs Adamovičs, who is a Professor of Latvia University of Agriculture.
Last year was very notable with introduction of new products, which we are proud of and wanted to share with you. Our key novelty was introduction of egg white smoothie under the trademark Fiteg². This is a trademark that we have created and registered in Latvia and also in Europe. The egg protein smoothies are available in three flavors, orange, apple vanilla, and mango. They are available in Rimi stores, in Stockmann, and also in Narvesen chain. This product is actually quite unique for our geography. We are the only FMCG company offering plain egg protein smoothies. We look very much forward to expanding this product line in the forthcoming year. Our second novelty was the introduction of the Chi Game package, the X. This indeed is a quite revolutionary solution.
We are the first fast-moving consumer goods segment company in our part of Europe who did this, I would say, experiment. We have created a mobile game called the Chi Game that is available on App Store and Google Play. It can be downloaded by scanning QR code on the Chi Game branded egg packaging. The game is educational. It's fun for both adults and kids. It's educational about the egg production process and all the delicious dishes that can be produced from eggs, and then one can engage into the sale of produced products in the mobile game, so it's fun. But in addition to this being a fun game, we also have seen a very good commercial results of this launch. The egg packaged in the Chi Game package has demonstrated record high sale numbers if compared to our alternative packaging solutions.
So far, this has proved to be a very successful revolutionary marketing tool. The third novelty is that in 2023, we have started offering liquid egg mass to our clients. This product is not produced by ourselves. It is produced from our eggs, but at the facilities of partner companies. We see very strong demand from B2B clients. The reason we wanted to do this in 2023 is basically to test the market and also establish a B2B relationship with clients, because production of liquid egg mass is something that we're going to do at our factory already this year, and I will come to that in the subsequent slides. Operational excellence is something we deeply care about and made some very tangible achievements here during last year. Actually, without waiting for legislative or regulatory pressure, we have went to conduct an energy audit.
We have went through the energy management system certification, which was awarded to the company in the first quarter of last year. That has been successfully adopted. The second achievement here is a successful, and that is not the first time we do it. We have again passed successfully annual audit of the FSSC, which stands for Food Safety System Certification. That's actually one of the most prestigious audits there is for food product producers, and this is something that is required if you want to cooperate with large international chains. This is by many regarded as a sort of a quality standard that you need to have if you are a reputable food product producer. We are happy to report that yet again, APF has successfully secured this certification.
Also, last year was quite interesting in the way that we have successfully used operational excellence practices introduced by Toyota and then introduced elsewhere in the world. We have worked extensively with consultants and introduced the lean program that is focused on Kaizen philosophy, and we introduced 5S principles into our production management systems. All our managers and all line employees have been accordingly trained, and we actually see tremendous results of this program. We have now a regular number of operational improvement initiatives, which are actually generated bottom up. We actually see this philosophy as something we're going to continue to implement and go even deeper in the subsequent years. ESG is the next topic we want to cover upon. 2023 was actually the first year where the ESG strategy was elaborated and was formally approved by the supervisory council.
Yet, ESG and waste-free mindset is something we have deeply cared about long before that, but last year was the year when we approved ESG strategy, and that is something that our supervisory council takes very seriously. We have obligation to report this year to the council on how we did vis-a-vis the KPIs that were set here. 2023 was not just about adopting the strategy. We actually also did some tangible things. One of them, and perhaps the most material of them, was installation of the solar park. The solar park that we have, it's relatively small in size, just a bit less than 400 solar panels with overall capacity of 250 kW. Despite its relatively small size, it's just sufficient for our Alūksne facility to be fully supplied by electricity during the summer months.
The overall capacity, also taking into account autumn and winter months, will be sufficient basically to substitute up to 25% of our total energy needs for year 2024. Last but not least is also we want to adhere to ESG principles in the packaging that we use for our end product. 2023 was notable in that year that we have introduced rPET packaging. This is recyclable PET. Basically it changes the perception of PET as a secondary or undesired material. This is a recyclable PET, which we believe also helps to contribute to the developing the mentality of consumers towards greener thinking and use of more recyclable ingredients in the production processes. We follow on with a post-IPO update on the execution of investment program. As you recall very well, we have completed our public offering in November last year.
IPO was concluded in November. Basically, shortly after that, we have proceeded with the starting of the construction. Already in December, we have begun the construction of the liquid egg products facility in Alūksne, and also the extension and the construction of the warehouse and sorting buildings in Alūksne. Also, during December 2023, we've managed to make advanced payment for the equipment for that facility, which is now being constructed as we speak. This project that we already started in 2023 is expected to be commissioned and operational in the second half of this year. Sales performance is the next topic that we going to cover. What you see on the screen now are the two pie charts, which basically give a breakdown of our egg sales based on the method of hen keeping or egg production.
You see that we have actually doubled sale of the free-range eggs from 1%-2%. It's still fairly small portion, and the important point I want to make here that this 2% is actually quite representative of the overall consumption of free-range eggs in our region. This is obviously a product which is 3-4 times more expensive on the shelf of supermarket, hence the explanation why the end consumer is not so keen to purchase it, as opposed to standard or barn eggs. We have experienced a decrease in the sale of enriched cage produced eggs. It went down from 48% in 2022 to 41% in 2023. Correspondingly also the cage-free or barn egg sales have increased by 6 percentage points from 51% in 2022 to 57% in 2023. That actually shows that our investment philosophy is basically proving itself.
We also have observed that the revenue from the cage-free eggs increased by almost a third, to be precise, by 27% in 2023 compared to 2022. If we look at the breakdown of sales by sales segments, in our business you have basically two key channels. One is retail, one is industrial, and also here we see that we have managed to secure an increase in the share of retail sales. Which is a good news because arguably, of course, when you sell to retail customer, your margins are better. We attribute this success to successful launch of new brands and deepening our cooperation with Rimi and other store chains in neighboring markets of Estonia and Lithuania.
If we look at the sales distribution through the lens of APF branded products versus private labels of retailers, here we are happy to report that we have managed to secure pretty much identical breakdown, which we believe is a very good news. It's no secret to consumers that the share of private label products on the shelves of supermarket has a tendency to increase. The fact that APF has managed to secure pretty much the same share of its own brand products is basically a testimony to our sales marketing team and also production team that we produce a very good product and the APF branded eggs are in high demand by consumers. Again, this is a very solid recognition of the good work that APF production marketing people do. Now on the screen, we see the breakdown of sales by countries.
In 2023, we have managed to increase a proportion of domestic market, the Latvian market. The sales went from 56% in 2022 to 64% in 2023. This again, we also see as a good sign because obviously this basically proves that APF branded products is in high demand and is becoming a first choice for majority of the households. Now, the subsequent sections will relate to the overview of the egg industry and financial indicators, and I'm happy to pass on to my colleagues, Mihails, our CFO, who will walk you through these sections.
Thank you, Yuri. Thank you, dear investors, shareholders for watching. Let's have a look on the micro slides of our presentations. First one will be analysis of the markets of egg market with the previous year, which we translate from NielsenIQ data. As you may see on the screen, the overall performance of egg market in all three Baltic states was good. It was growing. The lowest growing among the Baltic states was still in Latvia and even in a free range segment, as you may see, there was a drop. Nevertheless, we may say that APF performed better than the Latvian market. As we mentioned in free range, we made double growth. We doubled our turnover in this segment, but it was a matter of low base in 2022.
Nevertheless, on the second number of egg growing or indoor housing, as mentioned here, we experienced a 27% growth year-over-year, which is much better than Latvian market in this report. Also, we are very pleased and happy to mention that in Estonia and Lithuania, the indoor housing market grows significantly faster than the market in general, which is very good news for us and confirmation of our strategy. As we mentioned previously during the IPO, we see all Baltic states as our domestic market, not just Latvia alone. On the next slide, we would like to present you the situation regarding the egg prices, egg producer prices that are covered statistics from European Commission site. Here you can see prices during the previous year for all three Baltic states.
As it usually, and in common for this region, the lowest prices are in Lithuania, the highest price are in Estonia, and Latvian prices are somewhere between those two limits. You may see that Latvian price are much more volatile compared to the neighboring states, which is associated with the fact that in Latvia we have two largest producers of eggs concentrated, which send a lot of eggs for export, where the prices are more volatile. Nevertheless, this volatility was standard for our market, where you face the highest prices during the Easter time and next one during the New Year Eve. The lowest prices are just after the end of the previous year and during the summer. On average, prices in Latvia during previous period, as you may see, was among EUR 120-EUR 140 for 1,000 eggs.
Now let's move to our financial indicators announced previously, and let's do a short deep dive into the factors that led us to increase, first of all, in EBITDA for 2023, which was more than 30% higher than in the previous year. As you may see from this slide, the main increase was caused by increase in egg sales, which is explainable by the change in the market in the previous year, where egg prices increased, but increased only in the middle or second half of the previous year, matching to the higher feed prices that was a result of the war in Ukraine started last year. However, on the other side, as I mentioned, these feed cost prices hit us already in the beginning of the previous year, so changes in this cost was minor this year.
The other two factors that led to the increase in our expenses was some production costs, where in general it was payroll expenses and some other products that have grown due to the inflation in the recent year. The next big factor was also increase in administrative expenses, which is explainable with APF long-term strategy, which is not only for the year 2025, but also beyond. Each APF during year 2023 have strengthened its management team. New persons came with some increase in payroll expenses or some additional expenses in research and development. Still, all this increase in expenses allowed us to receive this better result in EBITDA, which was 30% higher than the year before. Next important, of course, financial indicator is net profit. Let's go through the changes of this as well, similarly to the EBITDA.
As you mentioned, the changes in EBITDA was EUR 660,000 during the previous year. Increase in net profit was not as big, and the main explanation is the state subsidies we have received in the year 2022. It was one-off subsidy to help us to overcome the negative impacts of the market that we had, and we didn't receive such significant support this year. On the other hand, we may be proud that the result we received this year was our own result with no state support. It was by EUR 200,000 higher than the previous year, which also makes 60%-70% of increase comparing to the previous year. Here, let's have a short look again on all financial main data. You may see all three years of consolidated data of the group.
As you may see, 2021 is not exactly comparable to 2022 and 2023 because of the production capacity, which was brought to current level only at the end of 2021. Year 2022 and 2023 was both on the same production capacity level. Nevertheless, we have some small drop in egg sales, number-wise of eggs. The revenue was still higher by 20%, as previously mentioned, and the EBITDA higher by 30% than the year before. Also, in net profit, as mentioned, there is a constant increase. One of the key performance indicator we would like to mention is this return on investment parameter, where you may notice a significant decrease in year 2023, but this is easily explainable with a significant increase in our group's equity, which happened due to the IPO, which increased our equity 8 times, and nevertheless, we had a higher net profit this year.
Return on investment parameter dropped, but still remained, I believe, in a comfortable level of 10%. Another financial indicator, return on assets, where there was no such an increase in assets number, you may see the constant increase during all three years. The last parameter I would like to mention here is this net debt to EBITDA indicator, which was acceptable already in year 2022. You see a significant decrease in 2023, which also explainable with IPO in cash we had as the end of the year and better EBITDA results in this year. That will be all for financial parameters, and I will transfer presentation to Yuri for the next plans.
Yes, we are approaching the end of our presentation, and the last substantive slide we wanted to share with you is a summary of our plans for the year 2024. Basically, there are 5 key things that we want to accomplish in the forthcoming year. Number 1 is construction of a liquid product facility. This is something that I've mentioned we started already in December. The construction works are ongoing as we speak, and we estimate this facility to be fully commissioned this summer, and in the second half of the year, we'll start sale of the products that is produced in-house. Number 2 is the extension of warehouse. This is also a part of the ongoing construction project, which is also quite instrumental for the storage of the increased output. Number 3 is the construction of 2 new barns.
This is something also we want to accomplish during this year. The construction works we expect to be completed fully this year, but the assembly of equipment, there is a probability that it can drag into the first quarter of 2025 for one of the two new barns. Number four is penetration of new markets with new products. This is something we want to continue to do, as we started that already last year. We have presented the new products that we are working on. There might be some new additions to come this year. Yes, export markets is something that requires a lot of time and a lot of human capital, and we want to do our homework well in advance to make sure that APF is ready to expand into new countries.
Last but not least, we make an estimate for the increase in revenue target for this year. The management believes that we should be in a position to grow our revenue by 7% in 2024. One might ask why this is so low. This is basically due to the fact that most of the contribution for adding new production capacities will be visible and felt in the financial results of year 2025. I would stop here and thank our dear investors and webinar participant for their attention, and I think we should be able now to open the floor for questions.
Thank you. A reminder to all the participants, please join the discussion by typing your question in the Q&A box that you see beneath the presentation. Questions can be asked either anonymously or with your name. What is the situation with employee retention? How big is the dependency on current employees?
I believe we're quite happy where we stand now. As a company whose key production facility is located in a remote region, obviously, sometimes you face challenges because obviously when you're located in a small town, there is a scarcity of workforce. I would repeat by saying that we feel pretty secure for the time being. Perhaps you can call it even a challenge, because obviously once we commission additional capacities, and there's actually quite a substantial increase, we would need to hire 20+ new employees towards the end of this year. We're going to be launching a recruitment campaign towards the autumn of this year. That mostly relates to the general workforce, to the line employees. We don't expect that to be of a huge challenge. If we speak of the middle management line, and also the top management, we are fully staffed.
Of course, as in any business, you are dependent on your core employees. We believe we have right motivation systems in place to make sure that our valuable employees stay with us.
Thank you. How to motivate buyers to purchase cage-free eggs instead of caged eggs?
I think the answer to this question lies more within the hands of big retailers and also perhaps the public service. You read it, that the private sector is doing its bit. Most of the large, especially international retailers, have already announced that starting year 2025, they will not be selling the caged egg. This change is already happening as we speak. We basically take, as a socially responsible producer, a wait and see approach because, of course, one can argue, and we always argue that animal welfare is important. On the other hand, we should be mindful of the fact that the product offering should capture entire population, because egg is a product that is necessary for all consumer groups. As we have said at the outset of the presentation, complete free-range egg is up to 3, 4 times more expensive.
Barn egg is somewhere 30%-40% more expensive. We see there is still a very large group of population, especially in Eastern Europe and also in Baltic market, actually, who for economic and financial considerations would go for the more affordable option. I think that all these three considerations need to move in parallel. As I have said, this shift towards cage-free production has already started. Nevertheless, there are some retailers who have not announced such a strong commitment to shift. The reason I think is also something we need to respect, because there'll always be groups of consumers who will prefer a more cheaper option.
During the presentation, you illustrated the new supervisory boards. What changes has the new supervisory boards brought to the company?
I think it has brought all the challenges you would expect from a professional, independent supervisory board. I think we are lucky in the sense that board is comprised of very mature professionals who are very accomplished individuals in their fields, and each of them have their own strengths and bring something to the table, ranging from entrepreneurial approach and going as wide as to assisting us with complex legal matters, improvements in financial reporting if needed, and also to some scientific and R&D contributions have also been made. All in all, we're very happy with the composition of newly elected board and the contribution it has made so far to our work.
Thank you. All questions have been answered. The recording of this webinar will soon be available online. Please follow APF announcements to stay up to date. Thank you for joining the call today.
Thank you very much, dear investors. Thank you very much.