Hello, ladies and gentlemen. Thank you for joining. I am Triin Vare, and I welcome you, you all, today's Tallinna Vesi's webinar. This webinar will be hosted by Aleksandr Timofejev, as Chief Executive Officer, and Taavi Gröön, Chief Financial Officer. Firstly, Aleksandr Timofejev and Taavi Gröön will introduce the highlights of the first quarter of 2023. The presenters will also speak about Tallinna Vesi's operational and financial results of the first three months. Aleksandr will give you an overview about some investments made in the first quarter of 2023. Right after the presentation, you will have an opportunity to ask questions. It is also possible to type in your questions during presentation, but these will be answered in the, in the end part of the webinar.
To submit your questions, please use the question box on the right side of the screen. Now, I will hand over to Aleksandr and Taavi. Here you go.
Thank you, Triin. Good morning, everybody, and welcome to our webinar. The Tallinn Water's financial and operational performance for the third quarter of 2023 was very good. Together with Taavi, we will cover during this meeting. Tallinn Water sales grew to EUR 15.61 million in the third quarter. The increase in sales resulted from the tariff increase due to higher production costs in the fourth quarter of last year. The company's net profit was EUR 4.05 million in the third quarter of 2023, which is EUR 1.84 million more than in the same period last year. Tallinn Water invested into the assets EUR 12.4 million in the third quarter of 2023.
The major projects for 2023 include the reconstruction of digesters and construction of combined heat and power plant at the wastewater treatment plant of Paljassaare. The reconstruction of filters and clarifiers at Ülemiste Water Treatment Plant, and the reconstruction of the existing water and sewer pipelines in the city. On 21st of September , Tallinn Water submitted an application to the Competition Authority to change the prices for water services. The application concerns the price for water services in the main service area in Tallinn and Saue, the service area in Maardu, and for our water companies. Depending on the proceedings of the Competition Authority, the new prices will take effect no earlier than from the next year.
The need for the tariff application is driven by justified costs and investments to ensure continuity of vital services, to reduce the environmental impact caused by water consumption, and to safeguard the environment. In the third quarter, we were present at the thirteenth Youth Song and Dance Festival, the Investment Festival around Lake Ülemiste, and the Ironman Triathlon in Tallinn, offering fresh drinking water for free to all participants. At the beginning of the year, we introduced Ice Pigging technology for cleaning water pipes. Using this method, we have cleaned over 100 km of water mains in nine months. Ice Pigging is a pipe cleaning technology that is currently unique in the Nordic countries, in which an ice slurry made of water and table salt is pumped through the pipelines. Now, we move on to the operational results.
As I mentioned before, the third quarter operational results were very good. We continued to provide reliable water and wastewater services in the third quarter, as reflected by the steady high level of quality indicators. During the nine months and third quarter of this year, the quality of tap water was excellent, meeting 99.92% of all quality requirements. Clean tap water has been ensured by an efficient water treatment process, regular monitoring, and ongoing preventative maintenance work on the water network. From the beginning of 2023, we clean water pipes using the Ice Pigging techniques, and in nine months, we have washed 106 km of water network with ice slurry.
Additional disinfection will ensure that the requirements set for tap water quality are met at various points across the city, where chlorine level in the water are normally very low, especially in the summer when the water is warm. In the first nine months of 2023, wastewater treated at the wastewater treatment plant at Paljassaare met all the established requirements. Pollution parameters that are significantly lower than the limits required by the law, is the proof of the excellent level of treated effluent. In the nine months of 2023, we have taken 541 tons of debris, 189 tons of grit, 1,383 tons of nitrogen, and 187 tons of phosphorus out from the wastewater. Customer satisfaction in the third quarter was at 3.8 points out of five, and at 3.9 points during nine months.
In order to increase customer satisfaction, we have made several changes in the work organization. The level of water loss in the water network has remained low in the first quarter of the year, being at 9.98%, remaining also lower than in the same period last year. For the first nine months of 2023, the leakage rate is 13.47%, compared to 16.25% last year. One of our goals is to notify our customers about water interruption, so well in advance. In the first quarter of 2023, we managed to notify our customers in 100% of the cases, at least one hour before an unplanned water interruption took place. During the first nine months of the year, we notified almost all customers affected by an interruption. The result is 99.9%.
For customers who had a water interruption in the third quarter, it lasted an average of two hours and 26 minutes, which is exactly the same as in the same period last year. As for the first nine months of the year, the average duration of water interruption was 17 minutes shorter than in the same period last year. To reduce the inconvenience caused by the water interruptions, we continue installing additional isolation valves on the water network. In nine months, 16 additional isolation valves have been installed. By the end of the first quarter of 2023, we had reconstructed more than 23 km of networks. In the first nine months of 2023, major reconstruction works have been carried out on Järvevana Road, Vana-Kalamaja Street, Rahumäe Road, Pöörise Street and Akadeemia Road.
In the third quarter of 2023, we started reconstruction work on the supply pipeline for Lasnamäe booster pumping station at the intersection of Punane and Smuuli Streets. Now, I will hand over to Taavi, who will present financial numbers. Thank you.
Thank you, Aleksandr. Now a short overview of our financial performance. But first, let's start off with a quick comment on latest economic forecasts. SEB Bank finds that Estonian economy will return to growth next year, but after a two-year period of decline, the recovery will be slow. The central bank forecast this year's economic recession to be 2.2%, and next year's economic growth to be 1.4%. The state of the economy is worse than usual, but not all sectors are in the same situation. The biggest setbacks have hit the industrial sector, which has had to deal with supply problems, decline in key export markets, and exchange rate depreciation, and then rising production costs. Inflation continues to slow.
The price increase in Estonia is expected to be around 9.4% on average this year and 3.4% next year. The slowdown in the rise of consumer prices and energy prices has a direct impact on our company's financial results as well. The net profit of the company in Q3 amounted to EUR 4.1 million, EUR 1.8 million above the same period in 2022. The gross profit of the third quarter in 2023 was EUR 6.6 million, recovering by 86% compared to the same period last year. The gross profit recovery is primarily impacted by higher sales revenue and underlying price adjustments caused by increase in cost of goods and services sold. The price adjustments took effect from 1st of October in 2022.
The operating profit in Q3 was EUR 5.1 million, EUR 2.7 million above the same period in 2022, being mainly impacted by recovering gross profits, but partly set back by higher administrative and marketing expenses. Beyond changes in operating profit, bottom line was impacted by increasing in interest expenses and slightly by lower dividend and related tax costs. Moving on, let's take a look at changes in revenue and expenses in more detail. First, regarding revenue. Total sales revenue for Q3 increased by 15.8%, amounting to EUR 15.6 million. In the third quarter, the total revenue from water services increased 19% or EUR 2.3 million compared to Q3 last year.
Increased sales were a result of the adjusted water price from 1st of October last year, and as mentioned, price adjustment was prompted by higher production costs. In the third quarter, the private customers' revenues in main service area increased compared to the same period in 2022 by 23.6% to EUR 6 million, primarily reflecting the change in water service prices. Business customer revenues in main service area decreased compared to the same period by 1.6% to EUR 4.3 million, driven by lower consumption. Lower growth numbers for business customers' volumes in Q3 showed a negative trend versus 2022 third quarter, but remain in comparable level with last year for the nine-month period.
Construction services were EUR 1.3 million, decreasing by 7% year-on-year. The decrease in sales resulted mainly from lower revenue from network reconstruction projects. Next, let's take a look at the cost. The total cost of goods sold amounted to EUR 9 million in Q3 2023, being EUR 0.9 million lower compared to the equivalent period in 2022. The changes were influenced by lower direct production costs. The total production cost amounted to EUR 2.8 million, showing around 32% or EUR 1.3 million decrease compared to the equivalent period in 2022. This primarily is supported by stabilizing electricity prices, partly set back by higher chemical costs.
Staff costs increased by 18% to EUR 2.26 million due to an average 9.5% salary increase for and recruitment for new positions. Depreciation increased by 0.3 million euros due to increase in investment activities. Construction services in the third quarter of 2023 decreased by 12.7%, which is directly related to the lower volume of services provided and construction revenue. In addition to the total cost of goods sold, administrative and marketing expenses increased by EUR 0.34 million compared to same quarter last year, amounting to EUR 1.45 million. This change is mainly due to higher salary costs and increase in professional services that are brought on consolidated level.
Finally, let's take a look at the cash flows as well. As of September 30th, 2023, the company cash balance stood at EUR 10.4 million, forming 3.8% of total assets. Compared to the end of last quarter, the cash balance has decreased by EUR 2.6 million, mainly as a result of investing activities into non-current assets. The biggest contribution to the cash flows comes from the main operations. During the nine months of 2023, total operating cash flows amounted to EUR 19 million, which is EUR 7.9 million higher than in comparative periods of last year. Collection of receivables continues to be high, exceeding 99% on average.
The net cash flows from investing activities during the nine months of 2023 resulted in a cash outflow of EUR 17 million, which is EUR 3.8 million more than in the same period last year. The company's financing cash outflows during the nine months of 2023 were EUR 4 million, which is EUR 13.6 million less than in the same period last year. Key changes include lower dividend payments due to operating cost impact on 2022 net profit, and increased lending in Q2 2023 to finance investment activities. This will conclude my overview. Thank you very much for your time.
Yes, thank you, Alexander and, Taavi. Now, we will proceed with the questions. You will have now few minutes to submit your question. Please feel free to type in any questions you might have.... So, thank you for the questions. We will proceed with these in order they have been received, and the first one is from Silver Seiman, from Avaron: "What's the chemicals cost outlook for the next year? And are you expecting stabilization at current levels, or could there be an additional cost pressure?
Thank you. We purchase our chemicals through public procurement, and this is what sets very much the pricing. We see that there is stabilization of chemicals pricing, but the price pressure has not alleviated completely. So, there will be some continuous price pressure in next year, in our opinion. But we're confident that justified costs can be recovered in regulated pricing.
Thank you, Taavi. And there's another question, also from Mr. Silver Seiman: "At what point would we expect reversal of the remaining EUR 6 million provision taken from third-party claims?
Thank you for the question. So, as you know, the court proceedings take a lot of time, and at the moment, there are no final decisions from the court regarding these legal cases. So, we constantly look at the opportunities and constantly wait, if we have to change our policy at the moment regarding the provision or not. At the moment, we are waiting for the decisions that should come from the court's final decisions. And after that, there will be done decisions regarding the provision taken off or not. Thank you.
Thank you, Alexander. And there's another question from Mr. Silver Seiman: "Is it correct to assume lower capital investments in 2024 compared to this year?
Thank you very much for the question. The CapEx budget for 2024 is not approved yet, so at the moment there are a lot of discussions and planning in the company. And after the decisions will be taken regarding the next year CapEx plan and the budget, the company will notify shareholders about that.
Thank you, Aleksandr. We will give you one more extra minute to type in your questions, if you have any. Okay, seems like we don't have any more questions. Recording of the presentation will be available in Tallinna Vesi's YouTube channel, webinar playlist shortly. Presentation materials and reports can be found on Tallinna Vesi's webpage. Taavi Gröön and Aleksandr Timofejev, thank you for the overview, and thank you all for joining. Have a good day.