Yeah, good morning, ladies and gentlemen, and welcome to AGRANA's conference call, presenting our annual results for 2022-23 financial year. You already got some insights in our figures when we published ad hoc announcements on the 27th of March and on the 28th of April. Today we will provide you with more details on all segments and the audited financial statements. As announced in our invitation, presentation is available in reference to our call. You can find this presentation in the IR section of our website. With us today are three out of four members of the management board. Markus Mühleisen, CEO of the group, will start the presentation with an overview on the highlights of the last financial year. He will also comment on the market environment in the three segments. CTO Norbert Harringer will afterwards present to you the group's ESG activities.
He will also tell you what is going on in the group regarding raw materials, production, and investment. Finally, our CFO Stephan Büttner will report on the audited financial statements in detail. He will also conclude with an outlook for the current 2023-2024 financial year. The presentation will take about 35 minutes. Afterwards the management board will be glad to answer your questions. Now I may pass over to our CEO Markus, who will start with the presentation.
Thank you, Hannes. Good morning to everyone. Today we present our results for the past fiscal year. Let me start off with a bit more strategic view here if you turn to slide two of the presentation deck. I wanna reiterate a point that we discussed about a year ago, which is that we're on our path to writing the next chapter in the history of AGRANA. AGRANA is a strong, innovative, and well-positioned company with lots of potential.
we're working very hard on that, focusing on five priorities, driving greater customer and market orientation, leveraging, the synergies and the innovation potential within AGRANA to provide more of value-added products to our customers, delivering the organizational change necessary to, make us, relevant, in the future, to, focus on driving those, higher-margin parts of our business, for more profitable growth but also doing, business, sustainably. those are, five, strategic priorities that, we've been working on. If you turn, to, slide three, we will talk more about, our strategic direction and, about our plans for the upcoming years at our annual meeting, and, we invite you in to join us there. now moving to, slide number four, let's talk, about the past year, though. 2022-2023, was a year, of course, marked by, different multiple crises, high volatility, many challenges on many fronts.
Despite these many challenges, we have delivered very strong operational results, which you see in our numbers. Our diversified, sustainable business model really came to the forefront in these turbulent times. Our teams have done also a great job in managing through these multiple challenges. I just wanna point out that this is not taken for granted also by our customers. In many conversations I've had with our customers, it's become clear that they really value the ability of AGRANA to deliver day in, day out, even when times are tough. It is something that does differentiate us from many other competitors in the marketplace. We're also proud of the fact that when you look at our 2022-2023 results, they were actually driven by all of our segments and divisions.
I do wanna highlight the turnaround in the sugar segment. As you know, we've had a number of challenging years now since the liberalization of the EU sugar market in 2017. But in the past year, we were able to return the segment to profits. Of course, a more favorable pricing environment helped, but it's also been the result of really hard work restructuring the business, taking cost out, and making sure that we are facing into the challenges of this business. That's been reflected in the numbers. We've also seen great performance in the other divisions and segments, and Stephan will comment on that a bit more. We've also been, as I mentioned, working hard on our strategic agenda. One of the focus areas, of course, has been doing business sustainably.
We're very proud of the fact that we not only completed our greenhouse gas footprint assessment for Scope 1, 2, and 3 last year, but we also submitted our climate action plans and our plans to get to net zero to SBTi in the fall. Norbert will comment on that a bit more in a moment. Looking forward, we do see the good developments in our business continuing in 2023 and 2024. We also do see market volatility continuing, so it will require us to continue to remain very agile and continue the strong execution that you've seen in our 2022-2023 numbers. If we turn to page five, slide five, here are some of the highlights. Stephan will go into this a bit more in detail, but you can see our top line was up 25% to EUR 3.6 billion.
Our operating profit was up over 80% to EUR 158 million. Our operating margin improved by 140 basis points to 4.4%. Our EBIT, which of course was impacted by the write-downs we had to make in the fruit segment, still was up over two and a half times to EUR 88 million. Also our earnings per share, obviously over a loss in the prior year to EUR 0.25 per share. As a result, we have now recommended to the board and to the general assembly that will happen in July to pay EUR 0.90 dividends per year. As you know, we have a policy of consistent dividend earnings. You see that reflected in the number. A couple of comments on the market environment. We turn to page six and seven.
In the fruit segment, we do see on the one side, some of the bigger players struggling a bit now, as consumers turn to cheaper private label products. For AGRANA, as we're serving all players in the market, it's not really affecting our volumes that much. Clearly, we're trying to figure out how to help the bigger players to continue to drive growth and innovation. In our juice segment, juice division, we see continued good demand for our products, allowing us to achieve better margins than in prior years. We also see more demand for our added value products. In starch, quite a mixed picture in general, with different customers being challenged, obviously by a very tough market environment with high raw material cost and energy cost, which is making life difficult for everyone. We do see that a lot of discussions around pricing.
One of the things that we've been able to do, I think, quite well navigating through this tough environment is to work very closely with our customers on good price management. We do see that is being recognized. In the sugar, as I mentioned, we've been able to turn around this the segment. The market environment has helped us there. We have seen a bit of an influx of sugar out of the Ukraine. In the past year, it was not at a level which significantly distorted the market. We'll have to monitor it how it goes this year. There are some predictions that there will be more sugar coming in from the Ukraine this year, we'll have to monitor that.
In general, we do see good pricing levels in the sugar market with a European sugar market more or less balanced between supply and demand. The subsequent slides in the presentation are more for your reference, so I'm gonna skip over it and turn over now to Norbert to talk about our ESG focus.
Thank you, Markus.
Ladies and gentlemen, also from my side, a very warm welcome to our today's conference call. Let me begin with our focus on ESG. In July 2021, AGRANA joined the Science Based Targets initiative. Within this initiative, companies commit to setting emission reduction targets in line with the Paris Agreement. In November 2022, our group submitted its Science Based Targets to the SBTi for validation. The process of validating these targets will start at the end of this May 2023. Under the Science Based Targets submitted, AGRANA commits to reducing emissions from its production operations. That means Scope 1 and Scope 2 by 50% by 2030-2031 relative to our base year 2019-20. Lowering emissions from the upstream and downstream value chain. That means Scope 3 emissions by about 34% over the same period.
The company's long-term goal is to be able to report net zero emissions in its own production activities, Scope 1 and Scope 2, by 2040. Net zero emissions across the entire value chain by 2050 at the latest. Coming now to operations, ladies and gentlemen, AGRANA processed 8.6 million tons of agricultural raw materials in the last fiscal year. As you can see on page 14, 4.7 million tons of beets and around 340 tons of raw cane sugar were processed as raw materials in the Sugar segment. In the Starch segment, our plants processed 2.5 million tons of corn and wheat and around 240,000 tons of potatoes.
Of the 900,000 tons of fruit processed in the fruit segment, a very large proportion was apple, which is the main input material for fruit juice concentrates production, while strawberry accounts for the majority of fruit preparation production, with a total of around 70 different fruits being processed in this business line. In the last business year, about 343,000 tons of raw materials were purchased for the fruit preparation activities. The volatile market setting for commodities and the fact that the global trend in freight costs for the full year was still rising drove an average increase of about 20% year-over-year in raw material costs for fruit and ingredients. There were increases in purchasing prices across all fruit categories as well as for sugar and starches used. AGRANA thought to pass these higher input costs on via adjusted contracts with customers.
The group's global requirement of 55,000 tons of strawberry, the most important fruit by volume in the fruit preparation business, was contracted at significantly higher prices than in the year before due to largely to higher production costs on the supplier side. In the fruit juice concentrate business, the 2022 apple harvest was characterized by very good raw material availability in the Polish growing regions. The higher apple quantities harvested there largely made up for lower availability of apples in Hungary, Romania, and in China. At the Ukrainian side as well, the apple processing volume reached 90% of normal despite the difficult circumstances. There was also good availability of red berries. In the 2022-2023 campaign, the potato starch factory in Gmünd here in Austria processed about 217,000 tons of starch potatoes compared to the prior year. There were 274,000 tons.
At the two Austrian locations, a total of about 1.4 million tons of corn and other cereals was processed in the financial year. In 2022-2023, the Hungrana facility in Hungary was not able to duplicate its grinding volume of the year before. The plant in Romania processed more specialty corn and less yellow corn than in the previous year. On page 16, now a step to the commodity markets. Grain futures prices were marked by strong volatility throughout the financial year, buffered by war-driven turmoil and unfavorable weather conditions. Quotations for corn and wheat on the MATIF commodity derivatives exchange initially rose sharply in the first months of the financial year following the outbreak of the war in Ukraine. Since summer 2022, a falling trend could be seen.
The price declines on the exchange were caused by lower demand, an absence of further escalations of the war, and agreed export corridors from Ukraine and large harvests in important production reasons. At the balance sheet date of the 28th of February in this year on Euronext Paris, wheat quoted at EUR 274 per ton and corn was at EUR 279 per ton. Now some comments on our investments. In all segments, we focused on energy efficiency and plant modernization. The fruit and starch segment also invested in capacity expansion.
The key projects in the individual business were: in the fruit segment, the acquisition of new stainless steel containers for asset replacement and capacity expansion in our factory in Mitry-Mory in France, the installation of new facilities of product diversification, the so-called brown flavors, in Jacona in Mexico, and the completion of the application laboratory in Dachang in our factory in China in China. In the starch segment, we completed the measures to increase specialty corn processing in Aschach here in Austria at the expansion of the company wastewater treatment plant in Aschach and in Gmünd and the enhancing the flexibility regarding the energy sources used in order to safeguard production at all of our sites. In the sugar segment, we did an replacement of evaporators in Sereď in Slovakia to reduce energy consumption.
We did a renewal of the evaporation station in Opava in the Czech Republic to save energy and the conversion of our packaging lines and plants in Buzău in Romania. Ladies and gentlemen, as an industrial processor of raw materials, our group has no higher priority than safeguarding the continuity of supply to our customers and ensuring the energy and processing security that this requires. This is why, with a view to the dependence on Russian gas, we started planning as early as March 2022 how to maintain our energy supplies, especially during the energy-intensive campaigns, and thus assure security of processing in the production plants. The solution we chose was to use extra-light heating oil alongside natural gas. This required the conversion of systems in the relevant sugar and starch factories and ultimately worked well.
Coming now to slide 20, our investment plan foresees a total investment in the new business year across the three business segments at approximately EUR 150 million. It significantly exceeds both the last year's value and the this year's budgeted depreciation of about EUR 120 million. Approximately 16% of the capital expenditure will be for emission reduction measures in the group's own production operations under the AGRANA climate strategy. On slide 21, the bar chart is just a reminder of what happened in the group on CAPEX level in the last 13 years. We had heavy investments between 2010 and 2019 of around EUR 1.2 billion. With the outbreak of the COVID-19 pandemic, investment was reduced below depreciation level for three years in a row.
With the new business year, we started again to invest significantly more than in the recent years, also in terms of reaching our sustainability goals. Ladies and gentlemen, let me now hand over to Stephan Büttner.
Thank you. Also welcome, ladies and gentlemen. We start with the revenue overview. Already mentioned, we had an increase in total revenue of 25.4% up to EUR 3.6 billion in the last business year. This was driven by all segments. As you can see in Fruit, we had an increase of 18.4% up to EUR 1.48 billion revenue. This was mainly driven by price increases. In the fruit preparations business, we had a slight decrease in sales volume by around 5%. In the juice business, we had an increase in sales volumes, especially in the berry juice concentrates, but also apple juice concentrate, and also a slight increase in our added value business, the juice compounds. Also there, in all areas, price increases. In Starch, also an increase of 28% on the revenue side, up to EUR 1.3 billion total revenue.
Mainly price-driven. In the main products, we had a decrease in sales volume of around 10%. A significant increase in revenue, 34.6% up to EUR 860 million revenue. This was also driven by price increases with a slight decrease in sales volume of around 2% of sugar at around 1 million tons sales volume in total. EBIT, we had a total EBIT of EUR 88.3 million, a very significant increase versus prior year where we had EUR 24.7 million. In starch, we had EUR 80.2 million EBIT with an EBIT margin of 6.2%. As already mentioned, price increases and therefore also margin increases were the main factors here in starch. In sugar, and this is a big turnaround, we could realize an EBIT of EUR 46.6 million in the segment sugar.
This is a significant improvement there. Overall an EBIT margin of 5.4%. In Fruit, on operative level, the operative result was comparable with the last year of a little bit more than EUR 50 million. Here, the let's say the lower results in the fruit preparations business were compensated more or less by the better result in the fruit juice concentrate business. What we also had to take into account was the write-off of the goodwill for the impairment of around EUR 90 million. Therefore, we had overall a negative EBIT in the Fruit segment of minus EUR 38.5 million. When we look at the consolidated income statement, again here as a summary, revenue EUR 3.6 billion, EBITDA EUR 277.1 million, 44.1% increase versus prior year. Therefore, quite a good operating profit of EUR 158.4 million, also a very significant increase of 83.1%.
exceptional items mainly here driven by the write-off of goodwill, so the impairment, and therefore the EBIT with the EUR 88.3 million. EBIT margin 2.4%. The net financial items amounted to minus EUR 26.5 million. So there were around EUR 10 million more than in the prior year. This was driven by a fixed effect on one hand and on the other hand higher interest expenses driven by higher gross financial debts as well as a higher average interest rate. The profit for the period after tax EUR 24.7 million, there we had a loss in the prior year, so also a very significant improvement, and the earnings per share EUR 0.25. exceptional items once again here. So in you see in the fruit segment, the EUR 91.1 million write-down and the slight positive effect in the concentrate business.
There we had a release of a provision which was built in the prior year due to the war, the outbreak of the war in Ukraine. Mainly, let's say about receivables, which we were assuming that they will not be paid, but which did not happen finally. We could release this provision. This is the overview. Next is the goodwill impairment again. This was driven by two factors. On one hand, we had to adjust our expectations due to the risk factors coming out of the Ukrainian war in the Fruit Preparations business especially. On the other hand, we had a significant increase of the weighted average capital cost. We had to write down the goodwill at the end of the first half year, 2022-2023.
This was the impairment, more or less the exceptional items. Energy costs, a significant increase of more than 66% versus prior year up to EUR 357 million. Mainly impacted here the sugar business and the starch business, very energy-intensive businesses. Also, of course, EUR 10 million up in the fruit segment. A significant increase. On the right-hand side, you can see the energy mix. Our main factors, the input factors here is natural gas on one hand and electricity on the other hand. The net financial items, minus EUR 26.5 million. I already commented on that. Move on to the tax rates. You see tax rate reported 60%. Of course, this is a very high percentage and mainly due to the write-off of the goodwill of EUR 90 million.
When you look at the adjusted tax rate, we have a comparable tax rate with the prior year on an adjusted basis of 25.9%. Main drivers here, of course, the goodwill impairment of EUR 88.3 million and the result coming from the at equity, joint at equity consolidated, companies which are not taxable. Therefore, the adjusted tax rate is 25.9%. The cash flow statement on a consolidated basis. We see a very good operating cash flow with four changes in working capital of EUR 282.3 million, going up 36.2% versus prior year. Of course, the changes in working capital with a very heavy impact on the net cash from operating activities with -EUR 259.2 million. Therefore, the net cash from operating activities resulted in EUR 1.9 million.
After our activities, investing activities, we end up with a negative free cash flow of EUR -87.1 million. As already mentioned, this is mainly driven by the changes in working capital. Therefore, we look at this as a temporary issue. The consolidated balance sheet, also an increase of 13.6% in total assets up to EUR 3 billion, leading also to the KPIs, equity ratio 41.8% still solid, but of course, going down by 6.7% versus prior year driven on one hand by the write-off of the goodwill of EUR 90 million and on the other hand by the increase of the total assets. The net debt amounting to EUR 684.9 million, also a significant increase of around 30% mainly driven by higher raw material and energy prices and therefore resulting in higher inventories in the working capital.
Therefore, the gearing with the 54.5%, of course, an increase of 13%, I would say is still in an acceptable range. Of course, we also need to focus on debt in the short-term future to bring the ratio down. The dividend proposal already mentioned. We'll propose a dividend payout in the amount of EUR 0.90 per share for the 2022-2023 financial year. As already mentioned, I mean, we are committed to a stable dividend payout as AGRANA. We are convinced that the overall result and also the cash flow justify this dividend payout. On the next page, you can see our earnings per share on an adjusted level with the EUR 1.69 per share. If we take this EUR 0.90 per share, then it's a little bit more than 50% payout for the last business year.
Finally, let's come to the financial outlook. As we already published, we expect on EBIT level a very significant increase versus the business year 2022-2023, which means more than 50% increase. On a revenue level, we expect a significant increase, which means at least a little bit more than 10%. When we have a look at the different segments, in Fruit, a moderate increase in revenue and a very significant increase on EBIT level. Starch, also here an increase in revenue, a decrease on EBIT level. In Sugar, significant increase in revenue and on EBIT level. The outlook for Q1. In Q1, last year, we reported an EBIT of EUR 51.6 million. Our guidance for the Q1 2023-2024 is a significant increase, which means at least +10%. Thank you, ladies and gentlemen. I hand over to Mr.
Haider for the financial calendar.
Before we go on with the Q&A session, I just wanted to remind you that today in the morning, we published our annual research annual report. We would like to invite you also to visit our digital report on reports.agrana.com. Having a quick look on the financial calendar, I just wanted to highlight that our annual general meeting will take place on the 17th of July. As the CEO mentioned, during this event, also the core elements of the new strategy will be presented. We will now start with the Q&A session.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on the touchscreen button. If you wish to remove yourself from the question queue, you may press start followed by two.
If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press start followed by one at this time. One moment for the first question, please. Our first question comes from the line of Anton Brink with Antaurus. Please go ahead.
Good morning, gentlemen. I would have three questions. First question would be, could you help us a bit in understanding the financial guidance, because obviously, given the significant goodwill impairment, EBIT is a difficult metric to understand year-over-year operational performance. Secondly, I would have a question on your guidance for the next fiscal year, specifically when we speak about the Sugar segment.
Well, as mentioned also in this call, the European sugar dynamics appear to be highly favorable, for producers in the context of a deficit situation, European spot prices reaching, I think, EUR 1,200 per ton levels nowadays. Implicitly, yeah, what to expect from sugar and, on an operating profit, basis. Lastly, I would like to understand the Q1 guidance a bit better. How to think of the different, segments on an operating profit basis. Thank you.
Yeah. Thank you very much for the questions. First of all, I fully understand, your question regarding the financial guidance for the full business year 2023-2024. I mean, it's correct that we had this write-off of or this exceptional result of nearly EUR 90 million in the business year 2022-2023.
We if we take this out, of course, then it's, if we say more than 50% increase, this means +EUR 45 million. On EBIT level, when we look at the operative performance, we had an operative result of EUR 158 million. As you know, we are not guiding operative results. Of course, we have a qualitative guidance, which means if we talk about significant increase, then we talk at a range of +10%-50% versus prior year. If we say very significant, it's more than 50% plus. On EBIT level, of course, we are committed to the more of 50% plus. If we talk about operative results, then it's more likely to be in the range of +10% to +50%. I think then the second question was concerning the sugar business.
As you saw, we could manage to get this turnaround in the prior year, of course, driven by favorable sales prices. The sales prices, from our perspective, are quite stable so far. Our expectation in terms of processing volumes is also better. The outlook is better than the prior year, which would mean that we should have a better utilization rate of our factories. Of course, there are still some factors which can have an influence on that, like the weather and other things. Overall, we think that this is a positive factor. On the other hand, we also saw energy prices a little bit coming down. Maybe with stable sales prices and the goods production volume, we expect further improvement of our profitability.
Of course, you know, the uncertainty always comes with this with the second half of the business year because there the new sugar marketing year is starting. We cannot be sure how prices will develop for the new sugar marketing year on one hand. This, you know, is a question also of supply and demand. What will with the production volume? What will happen on the world market? Many factors of uncertainty. For the first half of the business year, we are very confident that we will be able to keep our profitability of the last month in sugar. This leads me already then to your final question with the Q1 guidance. In total, the Q1 in the last business year was already a quite good performance.
We are basic our guidance is already, of course, based on the first one or two months of the actual business year. Therefore, we have a quite good view on debt. What I can say so far is that in all the segments, we have better performance than in the first one or two months prior year. Therefore, also, we expect this for the Q1 in total. As I already mentioned, if we say significantly better, then we talk about at least +10%. Our expectation is that it will not significantly exceed this +10%.
If we, I mean, if we do a bit of a deep dive into the sugar segments year-over-year because you did EUR 12 million EBIT in Q4 there, I know that fixed cost coverage is always quite difficult in Q4. As you mentioned, energy prices have come down. Sales prices have, or should have risen quite a bit. Basically, if I give you a ballpark figure of EUR 40 million sugar EBIT in first quarter, is it completely off, or could that be realistic in the context of the dynamics that I mentioned?
No, this is from our current expectation completely off, Yeah?
That's too optimistic. Okay.
Let's talk about not even half of this. Not even half of that.
Okay.
For the first quarter, only sugar.
Yeah. Okay.
No, for sure not.
I mean, this is you know, our volumes are not that big, yeah? We go for on a normalized basis around 90,000 ton sales volume per month, yeah? What we also need to see is that, of course, there is a slowdown on the sales volume side. We are lagging behind these budgeted volumes. Therefore, we have a negative impact on the volume side in the first quarter. This is what we already can say. On the other hand, of course, sales prices are stable. Therefore, we expect a good result. As already mentioned, not to this extent or amount that you mentioned here.
Okay. Very clear. Thank you.
The next question comes from the line of Vladimíra Urbánková with Erste Group Bank . Please go ahead.
Yes. Hello. Good morning.
I would have a few questions, rather general ones. One would be related to your energy costs. We have seen energy prices retreating recently. What is then your estimate for the full year 2023-2024 in terms of energy costs? Also, in terms of the energy mix, if we should anticipate some more changes. Do you use any hedging, by the way? The next question would be also related to inflationary pressures in the area of personal costs. If you could share with us how much you think personal costs will increase for the fiscal year 2023-2024. Yeah. Maybe also, if you could spend more on the 1st Q 2023-2024 guidance, where you see major tailwinds and major headwinds, if you could elaborate a little bit what is about the performance per segment. Thank you.
Thank you. Mrs. Urbankova, sorry.
Maybe you can repeat your second question. I didn't really get it. Let's start with your first question. I think it was about the energy cost. We reported, for the last business year, total cost of, I think, EUR 350.7 million. We have two factors, you know? On one hand, it's a matter of consumption that we have. If we process more volume, for example, in sugar, then we, of course, have higher energy consumption and therefore also higher energy cost in total, yeah? This is might be one factor. On the other hand, yeah, we are, let's say, somehow convinced that we already saw the peak in energy prices from our perspective. We already saw that the prices were coming down in the recent weeks, in gas as well as in electricity.
Of course, we hedged already, a certain percentage of around 70%, with the other volumes. We are still on the spot market. We can benefit from debt. Therefore, we can already say that we are quite safe with our, yeah, with the energy prices for the actual business year, which also means for the campaigns. I mean, we also bought heating oil for our campaigns, for example, in sugar. There we are safe on one hand from the supply side but also price-wise. I personally expect a further increase in total energy costs of around 5%-10% for the business year 2023-2024 compared with 2022-2023, yeah? The second question, sorry. Maybe you can repeat this. Yeah. If you expect any changes in the energy mix, Yeah.
We of course, I mean, we will see a little bit a shift from gas to heating oil, yeah? Which means that we will go down from gas with a percentage of 50% also with a share of 50% down or 58% down to 50%. Heating oil will then amount to 8% where we had only 1% in the previous business year, yeah? There is a shift. Other factors are stable. We expect 12%. We expect 12% in electricity where we had 10% in the prior year. Okay?
Okay. Okay.
Energy mix, yeah?
There was the personal cost issue, if you can maybe share a bit more information about it.
What sorry. I didn't understand it. Sorry again.
Personal cost issue, if you can share a bit more about the personal cost increase in fiscal year 2023-2024?
Personal cost. Sorry. Yeah, I mean, you are completely right. I mean, this is a very important factor that we have to have an eye on, yeah? Inflation, of course, is a very important factor. Of course, we also expect a significant increase in personal cost for the actual business year. I also here would expect an increase between 5% and 10% in total, yeah? This is something we need to manage in the future, in the light of potentially prices sales prices are coming down again. We need to be very careful that we will be able also in the future to pass these increased costs on into the market.
The next question comes from the line of Oliver Schwarz with Warburg Research. Please go ahead.
Good morning, gentlemen. Congratulations to the good results. I also have a couple of questions, please. Firstly, in regard to CAPEX investments, you fleshed out that 16% of the upcoming 2020-2024 CAPEX is for measures. Can you flesh out what the remaining 86% are for? Secondly, based on the chart you provided in your presentation, is that basically the start of another super cycle of investments above depreciation for the next, I don't know, 5-10 years? Or is that, let's say, a more compressed period of time that you might be willing to invest above your depreciation levels depending, obviously, on the performance of your businesses? That would be my first question.
secondly, just to chime in on hedging, you basically just said that, 70% of energy, requirements are already hedged. Could you do the same, please, for raw materials especially for the grain part of the business? Last but not least, I like to implore on the financial result in 2023-2024. What, movements are to be expected there? Thank you.
Okay. For the first question, investment, besides, our investments into, climate strategy, we will do in this year, for a major part an investment in our wastewater treatment plants all over the world, renewing, these plants, getting the chance to produce biogas, out of, the remaining, matter. For instance, we will do a renewal of several parts in our factories which, getting old and have to be, renewed. We will do some, maintenance, investments also all over the world.
To answer your second question, no, we do not intend to make a new super cycle in investments. We will do, according to our new strategy, several investments in the expansion of very specific parts of our production facilities.
The next question.
Sorry. The final question from your side was about the financial results for 2023-2024. I would expect a further, let's say, increase of the net financial result of, I would say, also between 5%-10%. We had EUR 26.5 million in 2022-2023. Up 5%-10%.
T hank you, Vladimir. Can you give a let's say, a percentage of raw materials hedged?
Our hedging in raw materials, the percentage nowadays will be between 15%-20%.
Thank you, Vladimir.
Mostly in the Starch segment. Yes. Yeah. In grain only, yeah?
Wheat and wheat and corn.
The next question comes from the line of Sebastian Maťo with Raiffeisen Bank International. Please go ahead.
Hello, everyone. First of all, thanks for the question. Unfortunately, I've got returned to the queue twice. Please apologize if the question has already been answered. The first one is regarding the sugar price development. What were the main drivers from your point of view? Do you regard the levels of sustainable? Furthermore, what sugar price do you assume in your revenue guidance? The second question would be about the inventory increase. Could you please share to which extent that was volume-driven and which impact the valuation had? Furthermore, how do you expect future development? Thank you. Yeah. thank you. You know, I mean, we cannot now not talk about prices in in in in detail, yeah?
What we can say regarding the sugar prices is that we expect a stable pricing compared to the actual price level. We do not expect a drop in prices right now for the new sugar marketing year. This is mainly driven by supply and demand. We do not expect a big surplus on the production side versus demand. Sugar prices on the world market are still high. Therefore, currently, we do not expect a drop in sugar prices, which, of course, then leads me to your second question. I mean, inventories, of course, there is a significant increase. This is mainly driven by raw material prices and energy prices. Main driver here, of course, is also the Sugar segment.
As you know, the beet prices are, let's say, influenced by the sugar prices and also the expected sugar prices that we can see out of our contracts with the customers. Then, of course, the sugar that we have produced and which is on stock are evaluated with the raw material prices, which derive from the expected sales prices. Therefore, there we have a significant increase. The other increase comes from also the Starch business where we also have higher, evaluated stocks. It's also here somehow a volume issue, yeah? On the other hand, also mainly price-driven and also driven by the higher prices for raw materials, especially corn and wheat but also energy prices. Our expectation for the future is that these things in Starch might go down, as we see a decrease in raw material prices.
In sugar, of course, we should expect a stable at least stable level for the coming months or, let's say, also the business year. This is of course influenced by the stable sugar prices and also by the bigger production campaigns that we expect.
The next question comes from the line of Baptiste de Leudeville with Kepler Cheuvreux. Please go ahead.
Yes. Thank you. Hello. Thank you for the presentation. My first question is on the fruit segment. Can you make the splits between fruit preparation and juice concentrates for last year results? Well, it's clear that in your message that fruit preparation is facing difficulties, whether it was a pretty good year for juice concentrates.
Just to have for me to have an idea of, if the fruit preparation business is doing profit and compare also to last year and have more color on this. Second question, I know you will address it more in detail in August. Can you share with us some tangible actions you have been undertaken regarding the strategy to, you know, to add value to your products, especially in starch and fruit, with your own recipes, etc.? Is it something that you will prefer to wait to communicate on? Third question about the current momentum. Are you still said that the prices there is some area, of course, that were relaxing, freight, energy, raw materials?
Do you still at this point, asking for negotiations regarding renegotiating contracts with customers or, regarding the recent development of price, you're not doing it anymore? Thank you.
Thank you. Let me quickly answer your first question. The split, on the operative result, between the preparations and the juice business is we had around EUR 32 million result operative basis in fruit prep and, around EUR 20 million on juice. Now we can hand over.
Yeah. Thanks. Look, on strategy, as you said, we'll talk more about it in July. You were asking for a couple of examples, out of fruit and starch. I there's a few I can share with you that we're already working on. That might exemplify some of the thinking that we're doing.
Starting with starch, you may have seen in, the past week or two, a press release around an investment in our starch factory in Gmünd. That investment is related to the opportunities the continued growth opportunities that we see in specialty starches, and in particular, for example, in an area what we call bio-based materials. You know, if you think more broadly and look at the green trends and the opportunities, created by, increased regulation and where customers are looking for ways, also in the non-food area, so in the technical area applications to replace fossil-based, raw materials with, renewable, materials, there's a whole range of opportunities that we see. We already have a leading market position, for example, in specialty starches that go into the construction industry. We see a lot more opportunity there.
That investment that we announced in Gmünd, you know, you should see in the context of that. A second example I can give you is that in our fruit juice concentrate business, there's an area which we call the added value business. That includes both flavor solutions as well as compounds. These are more complex type of products. That's an area where we have added some capabilities and some competencies. We also see a lot more growth in those areas. That's also where we can leverage the synergies and the competencies that we have across multiple AGRANA business areas. That's something, again, you can probably take it as an indication that we'll speak more to in July.
A third example I can give you is, from, Fruit Preparations where, of course, working closely with our customers and also reflecting sort of what I talked about being much more customer and market-driven, one of the big trends, especially in sort of the, for the dairy-based, customers actually is, non-dairy alternatives, plant-based alternatives. We've been, working on innovations for our customers for plant-based, dairy alternative products and offering there a whole range of, solutions. These are things that we're already doing in, or and have done in our past year. Again, you can take that as an indication that we see, quite a lot of, opportunity there. We'll talk more about that in July. Maybe that gives you know, a few hints of some of the things that we're thinking about.
We have a follow-up, question from Mr.
Oliver Schwarz, Warburg Research. Please go ahead.
Sorry to pester you once again, gentlemen. I've got two remaining questions if I may. Firstly, you stated that working capital, obviously driven by higher costs, has gone up quite substantially. That is unlikely to be sustainable due to the decline in energy costs. On the other hand, you are planning for higher sugar volumes, I presume. Hence, given the higher energy, let's say, structurally higher energy prices in Europe, due to the fact that Russia is unlikely to at some point of time continue its supply of cheap gas into Europe, and also, the changes in your energy mix, is there a target working capital ratio that you could share with us that you're aiming for? A target working capital ratio. Of course, we have target ratios, let's say, working capital to revenue.
There, we should go in the direction of, I would say, of, maximum 25%. As you see in history, our working capital usually amounted to around EUR 650 million. Actually, it's exceeding EUR 1 billion. I mean, if we on one hand, we have, of course, end-to-end, in the whole value chain, we see some room for improvement here. I would estimate if we talk about EUR 1 billion working capital, then we should be able, via excellence programs to bring this down by approximately 10%. The other on the other hand, things are price-driven, of course. Therefore, I mean, we should go back to around 25% in terms of revenue. I think this would be a good target. Thank you for that.
My second question would be on the dividend policy you have. On slide 33 of your current presentation, you state that AGRANA likes to have a predictable, reliable, and transparent dividend policy. The distributions are not only to be based on group's profit but also on cash flow and the debt situation. Now, basically, looking on 2022/23 numbers, what we have seen is that, yes, EPS went up significantly both in regards to, let's say, the adjusted and the reported value, or number. On the other hand, what we've seen is that both net debt went up. Free cash flow became negative. Despite that, dividend increased by 20%.
I'm if I want to, let's say, predict the dividends of future years, which should be according to your view, be rather easy because you have a predictable, reliable, and transparent dividend policy. How should I, let's say, model that for future years?
This is very simple. I mean, our policy is that we want to have a payout ratio of around 50% of our profit after tax in the future. If our plans materialize, I would say, also according to our strategic plans, then we should be able to have a stable dividend in the range that we currently have plus 10%, 20%, whatsoever. This is our target mid-term. Yeah.
That would basically exclude any, let's say, interference from debt situation, from cash flow fluctuations, and so on.
Okay. Because then this is already how shall I say? This is a range where we think that this is a good range for our shareholders. We do not plan to have exceptional items. You know, if we have a write-down if we have a write-off of goodwill, which is not cash-effective of EUR 90 million, then we have to take this into account. This is simply the answer, I think, to your question. We are not expecting this in the mid-term in our mid-term plan. If something like this would happen and we can never exclude these things from happening because we don't know what will happen to the weighted average cost of capital, for example. Things are very volatile. You know this.
We still have a goodwill of around EUR 97 million in our books. But, you know, this is not cash-effective. As already mentioned, we see room for improvement and working capital coming down again. If we will be able to keep our profitability and further increase it, then we think that we will go in the direction of EUR 1, dividend ex an example now, approximately per share. This should then amount to, let's say, around 50% of our profit after tax. This is our mid-term target.
Understood. Very clear. Thank you for that. Thanks.
There were no further questions at this time. I hand back to Hannes Haider for closing comments.
Thanks a lot for your participation in the call and all the questions.
If you have additional questions, please contact the IR department later on or in the afternoon. Thanks. Have a nice day. Goodbye.