Good afternoon, ladies and gentlemen, and welcome from Vienna to our full-year 2023 result presentation. As always, we appreciate your interest for our company Semperit. With me on the call is our CFO, Helmut Sorger, who will elaborate on the financial details in some minutes. Hence, I will start with briefly outlining our strategic focus, the company's vision, and new structure setup before going into the operational update. In this context, I will also spend a bit more time on explaining the two main investment projects where we currently see our major growth potential. Let me start with summarizing on slide three the main tenets of our corporate identity and strategic DNA since inception 200 years ago. There are only a few industrial companies in Europe whose roots go back to the 19th century, and Semperit is one of them, and we are celebrating our 200-year anniversary this year.
Our impressive history is based on strong success factors such as globalization, innovative spirit, and customer orientation, technology, and innovation. While seeking with our corporate destiny as a specialist of industrial elastomer applications, we have always aimed for being a pioneer in new technology and innovation while, at the same time, expanding our global footprint and product portfolio. Over the page, we highlight the four main strategic pillars underpinned by important megatrends and define the vision and mission statement of our Semperit company. The key themes I would like to emphasize here are not only our leading market position and strong industrial platform, but also the ambition for cutting-edge technology supported by a resilient business model. This would not be possible without the high qualification and motivation of our workforce and a customer-centric approach in marketing, sales, and industrial solutions.
Along with this vision, we have reached two milestones last year: first, the complementary expansion into liquid silicone rubber through the acquisition of RICO Group; and second, the streamlining of our organization through the setup of two divisions and a strong focus on cost leadership and operational excellence. Slide five should be familiar to most of you as we show the new divisional structure, which involves around Semperit's two main business models, one being the commodity-driven, highly standardized volume business of Semperit Industrial Applications, where we aim for cost leadership and a high degree of unification of products, processes, and equipment supported by sales excellence. The other being the innovation and technology-driven Semperit Engineered Applications, with a high level of customization and a focus on attractive niche markets. In contrast to the commodity-driven business of Industrial Applications, here we are predominantly dealing with a project and tender business.
As we had announced earlier, this new divisional structure aims to reduce complexity and to scale up our business, an ideal platform for focused organic and inorganic growth. On the next page, let me summarize again the key strategic rationale of each new division. Starting with the separate business of Semperit Industrial Applications on slide six for hoses, I would like to highlight the aim for cost leadership and an enlarged product range. The capacity expansion at our plant Odry is not only crucial to maintain our global market leadership in hydraulic hoses, but at the same time, setting a new efficiency benchmark for cost leadership, which we plan to roll out to other plants as well. In addition to expanding our competitive product range, we also focus on new applications.
As to profiles, in addition to our strong position in Central Europe, we plan to strengthen our position in the European construction and industrial markets and also increase our footprint in North America. From an ESG perspective, we started to use a portion of reclaimed materials to strengthen our focus on circularity. On the next slide, let me highlight the main strategic ambition for each business unit within Semperit Engineered Applications. Belting continues to do well, and we aim to exceed global market growth without expanding our existing capacity by concentrating on the operational side on efficiency. We have a coherent product strategy based on heavy and medium strength steel belt as well as performance textile belt. Within Form, the combination of portfolio streamlining and margin-accretive product-market combination should help to further transform this business into an attractive and profitable niche operation.
This can be scaled up through the extension of end-to-end application know-how in order to grow in our customized product-market combinations, and of course via automation and streamlined cost as well as the geographic expansion within Europe, but also into the Americas and the Asia-Pacific region. Finally, RICO should become our engine for organic and later possible also inorganic growth, with its focus on engineered technology, innovation, and attractive growth niche markets. We will come to RICO in more detail later. Looking back over the last year on Slide eight, we highlight the key milestones and achievements which you have followed in the course of last year. Following the acquisition of RICO Group and the sale of Semperit, we have refined our strategy and met the full-year guidance despite economic headwinds.
In terms of capital return, we have rewarded long-term shareholder support by paying not only a base dividend but also a special dividend after the sale of Semperit. Let me illustrate our new strategic growth investment with two specific examples. On page nine, we show a EUR 40 million capacity expansion at RICO to be completed by 2028. The acquisition of RICO Group has provided us not only with a complementary offering in high-performance advanced materials focusing on LSR, liquid silicone rubber, but an additional technology edge in injection molding tools and automation. Going forward, we will look for smaller bolt-on acquisitions to leverage our tooling expertise and exploit the significant market growth in silicone products in Europe and the U.S., which is currently estimated at a 7% CAGR by 2027. Turning the page, we show the capacity expansion of our hoses business in Odry, Czech Republic.
We have fine-tuned the project since it starts in 2022 and expect it to fit to an even better pace to the market development. The EUR 100 million ramp-up of new production facilities in Europe's largest hose plant will result in the most modern hose production facility, with a high degree of automation, supply chain efficiency, and sustainability. It is worth mentioning that the new production will significantly reduce CO2 emission and lower transport costs, and full capacity will be in place by 2030. With this, let me move on to the review of our operational performance, starting at slide 12. Here we show, on a pro forma basis, the revenue split by division, with the share of Semperit Engineered Applications increasing from 36% in 2022 to 48% in 2023, largely as a result of RICO Group and the less cyclical nature of the business in the Engineered Applications division.
In turn, Semperit Industrial Applications declined from 57% in 2022 to 46% in 2023, as this more commodity-driven business was more heavily impacted by economic downturn, and I would like to mention here the construction industry in Europe. 6% is our contract manufacturing of surgical gloves in Wimpassing for the new owner of our glove business called HARPS . Over the page, we present topline and earnings development for Semperit Industrial Applications, with sales down by 27% year-on-year and EBITDA by 47%, largely as a result of lower volume despite the price levels still being resilient and supportive to the profitability. The chart on the top illustrates the cyclicality of this commodity business and, since the third quarter of 2022, reflects not only a destocking effect that is now coming to an end but also slower economic growth.
In terms of segments, hoses were faced with restrained customer behavior, resulting in low market demand and short-cycle weaknesses. In turn, profiles were particularly impacted by the weak construction industry, implying an order backlog at a low but stable level. Our overhead cost measures have been effective and going forward. We continuously focus on customer intimacy and economy of scale. As to Semperit Engineered Applications on slide 14, revenues were up by 24% year-on-year and EBITDA by 36%, supported by tailwind from mining, lower raw material prices, and the RICO contribution. At the same time, prices remained high while our portfolio optimization, especially in the Form business, supported margins.
The chart on the top shows a more resilient, technology-driven business, with RICO's sales contribution of EUR 37.2 million since August 2023 and EBITDA adjusted for one-off effects from the acquisition of EUR 7.6 million, with good demand in health system food products and mobility. In terms of the business units, Belting still benefits from late-cycle demand in mining, which supports pricing and further order intake. In turn, Form was particularly strong in mountain application and very solid in its after-sales handrail business. Having stepped up our effort in ESG reporting and performance in recent years, Slide 15 provides a summary of major strategic initiatives and achievements in 2023. I would like to highlight here not only our ratings by EcoVadis and CDP but also our climate scenario analysis and the amended ESG strategy with a stronger focus on diversity and inclusion.
As you can see from the chart, we have clearly made progress in our environmental-related performance during the last three years. Nevertheless, we still have scope for improvements. In turn, targets in the field of social KPIs and especially supply chains and compliance measures have outperformed over the last three years. As the CEO of the company, I am particularly proud about the comprehensive training provided for our employees and the strong track record in human rights and business ethics. With this, I hand over to our CFO, Helmut, to take us through our financials.
Thank you, Karl, and a warm welcome from me as well. Let me start with our financial highlights, I think a slide well known to you, with some updates in there actually. We started the year ensuring financing for further growth by negotiating and extending finance lines of EUR 360 million in order to support strategic growth in our industrial transformation. What we did, we also adjusted our overhead cost base. We heard it before, we're a highly cyclical business in the SEA division, so a good way of thinking is to adjust the overhead cost base by the principle of lean management and cost leadership.
We announced in mid-year that we have savings as a target with about EUR 10 million run rate, and we actually delivered already EUR 5.8 million in a year-on-year comparison. Since I've started as the CFO of the company in October 2022, our main focus has been on cash to finance future growth and also provide shareholders with a decent return.
We've paid out EUR 92.6 million dividends, part as a base dividend, part as a special dividend after the sale of Semperit, but we still have a very strong balance sheet with financial net debt amounting to EUR 115.2 million that equates to a net debt-to-EBITDA ratio of 1.6. I will elaborate on our capital allocation policy in more detail at the end of my presentation, but now turning the page, let's head to the overview of financial KPIs in three-year comparison. The topline of the continued operations was down 7.5% year-on-year and EBITDA by 28.5%, still achieving a formidable double-digit margin despite low volumes and the pressure on fixed costs. This translated in a 44.3% decline in EBIT and a 35.2% lower earnings after tax, and I will come to the moving parts in a minute.
Free cash flow here is defined before the sales proceeds of Semperit and strategic growth projects to provide us with a more clean base for comparison. Similarly, CapEx is defined before M&A and without the EUR 165 million investments in the RICO Group. Please note that we provide greater transparency by showing the details for CapEx with EUR 36.2 million for maintenance and smaller growth projects and EUR 19.4 million for strategic growth projects such as the DH5 project in Odry, and I will come to that later. Over the page, when compiling the last 12-month revenue development of our industry division starting from Q1 2020, plotted against the EBITDA margin for the same period on slide 19, we see a consistent topline growth since Q1 2021 having reached its peak in Q1 2023.
Since the first quarter of 2022, this was closely tracked by an improved EBITDA margin, which started to revert in the second quarter of last year. In line with the cyclical downturn and combined with inventory reduction in the business channels, while volumes were in decline, we managed to keep prices stable with margins being further supported by lower prices for raw materials and energy. Please note that Q4 2023 was partly impacted by seasonality, applying downtime during the winter season, and cost savings. Nevertheless, the topline being still above the Q2 2022 level but margins lower, we now take a much stronger focus on slimming down the organization and enhancing efficiency. The next slide is probably most interesting to you for understanding the building blocks for our year-over-year changes in reported EBITDA.
In this context, we clearly benefited from the earlier price increases as negotiated in the previous year and, most importantly, from lower costs for raw materials and energy, but also logistics, which was more than offset by the deep volume decline and inventory adjustments. The contribution from RICO and cost savings largely offset wage inflation and miscellaneous items so that we arrive at an adjusted EBITDA of EUR 81.7 million before one-off items, and these were predominantly related to transaction costs with regard to RICO, personnel, and IT expenses for the carve-out of the medical business. Disciplined and stringent working capital management has become a major pillar of our finance strategy, as you can see on slide 20, with trade working capital as a percentage of last 12-month revenues amounting to a mere 15.9%, well below previous months.
This is largely a result of lower inventories in the wake of a general destocking in our industry but also decline in trade receivables on the back of lower sales. This we could partly offset through an increase in trade payables. There are some cyclical effects in there, but still, it was a major undertaking to get to that point by initiatives in working capital management that we've initiated in Q3 2023 and that we're going to continue over the course of this business year. Going forward, we'd expect trade working capital to stay below the 20% target, but we get more ambitious having reached the 15.9%, of course. I would like to mention that we've initiated everything to start with factoring of our accounts receivables. We have not used it in the business year 2023, but we started using it in the beginning of 2024.
Turning the page, we present CapEx for 2023 in its major constituent parts. As I had mentioned earlier, when excluding the EUR 165 million investment in the RICO Group, we arrive at a total CapEx of EUR 55.6 million or a 2% increase year-on-year. While maintenance Capex and small growth projects amounted to EUR 36.2 million, the important part is the EUR 19.4 million Capex for organic strategic growth, which is essentially the expansion of our DH5 hose plant in the Czech Odry as well as the RICO plant in Thalheim in Austria, which Karl had discussed earlier. Overall, this results in total strategic growth CapEx of EUR 184.2 million, including the RICO acquisition. Going forward, we'll report both parts of the Capex, organic, and on the M&A activities.
On the next slide, we show the moving parts from operating cash flow to free cash flow, with maintenance CapEx being the major building block to arrive at EUR 26 million free cash flow before the sale of Semperit. When then including the proceeds for the sale of the medical business, free cash flow adds up to roughly EUR 112 million in 2023. Please bear in mind that other items like net interest payments and other investment cash flow might change over time, notably with central banks' rates. As we have been net cash positive in previous years, the chart on slide 24 should help to understand the year-on-year change towards net financial debt position of EUR 115.2 million by the end of 2023.
A strong operating cash flow of EUR 66 million, the net proceeds for the sale of the medical business of EUR 85 million, in addition to the EUR 54.2 million net cash at the beginning of 2023, were essentially the financial backbone for us being able not only to finance the RICO Group acquisition but also our CapEx in 2023. The EUR 92.6 million for the dividend accounted for most of the paradigm shift in net financial debt. Given the net interest rate environment and our strategic growth targets, we feel that a new balance between equity and debt finance is more appropriate. The latter development is summarized in more detail on slide 25, with equity ratio having changed from the 61.5% in 2022 to 45.3% by the end of 2023.
All I would like to highlight here is our continuing strong cash position of EUR 113 million and the EUR 360 million new financing arrangements, which we partly draw on for the Odry DH5 extension and the RICO acquisition by year-end. With this firepower, we're in a good position to continue with the strategic priorities of our industrial transformation, and let me therefore summarize at the last page the main building blocks of our capital allocation policy. We divide here between normal investments financed by the operating and other investment cash flows and growth investments and shareholder return financed by the free cash flow. While the maintenance CapEx is essentially earmarked to maintain and enhance our existing industrial base, organic growth CapEx for strategic projects, whether the extension of our hose plant in Odry or the Thalheim site, combined with the M&A activity, account for major growth projects.
Suffice to say that shareholder return in the form of dividends will remain a part of our capital allocation policy. Please note that these constituent parts are in fair balance and priorities of capital allocation can shift over time, depending not only on external macroeconomic factors but also strategic growth opportunities. With this, I've come to the end of my remarks and hand back to Karl for his closing statements.
Thank you very much, Helmut, and I continue with the market outlook on slide 28. As mentioned before, the current cyclical downturn has a particular impact on our commodity-driven business of the division Industrial Applications, which is mostly evident in the weak construction and yellow goods industry. Here, we have still limited visibility this year 2024.
In turn, Engineered Applications benefits from diversified markets with different dynamics and its strategic focus on technology and industrial solutions, including molded application, mobility, and healthcare. Overall, our assessment is that we are currently going through challenging market conditions with first green shoots expected towards the end of 2024 earliest. Turning to our management agenda on slide 29, as we have implemented our industrial strategy, we feel distinctive focus on two competitive business models. We keep our focus on profitable growth while managing the current economic downturn. While anticipating ongoing top-line pressure, we try to address this through share of wallet gains and various cost programs and on certain stiffness on prices. Most importantly, the key focus remains on simplification, lean management, and operational efficiency, as Helmut just has outlined. Over the mid-term, we aim to set up a new growth platform for technical solution and cost leadership.
On the next slide, we provide you a first guidance for 2024. We expect full-year EBITDA at EUR 80 million and CapEx of EUR 70 million. The latter will be divided between 40% growth CapEx and 60% maintenance CapEx and small projects. Despite the ongoing economic headwinds and limited visibility for 2024, with the proposed dividend of EUR 0.50 per share, management wants to signal not only its business confidence but also strong conviction in this industrial strategy and future growth. In this context, we have summarized the five tenets of our investment proposition on slide 31, with a key focus on market leadership, innovation, our resilient business model, and cash generation capacity.
This links back to our strategy outlined we have started this presentation with, and the market will ultimately judge us on those criteria, with our key focus on being a value play with a recalibrated platform for future growth. With this, we have come to the end of our presentation, and Helmut and myself are now available for any question you might have.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchscreen phone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets when asking a question. Please stand by while we pull for questions. Today's first question comes from Christian Obst with Baader Bank. Please go ahead.
Yes, good afternoon and thank you for taking the question. First of all, I'd like to understand the growth plans within the two divisions. So one is, of course, the expansion plan in Odry. So why do you expand that until 2030, and what can we expect in terms of CapEx for the ongoing years? And when do you expect to ramp up something? So when do we see a positive contribution from that side? And is there any idea or chance that you will close down other facilities to keep the entire capacity a little bit into balance? This is the first question.
Thank you very much, Mr. Obst, for this question.
Odry, we decided to retune a little bit to 24 million hydraulic hoses, and we will relocate spiral hoses towards Odry to have all our, let's say, expertise and operational efficiency in Odry at the biggest hose production site in Europe. We continue to ramp up this up from 2025. This means you asked, "When is the first positive contribution?" It will be 2025 because the spiral hoses will be relocated this year and go online straight after, let's say, implementation there. And then, of course, step by step, according to the market demand, the facility will be filled with the machines. And please remember, we had 130 million hoses produced in the, let's say, high-peak season two years ago, and we had not one single meter capacity left over. And we had lead time to our customers, which were far too long to our customer base.
This means this capacity is needed to be the leader in this material, in this technology, in this product in the future because we believe strongly in the market, and we know the hose market is a cyclical market, and let's say the peak is coming again, and then we are ready to support the market at that moment.
And to add to that, your question with regard to CapEx, the total project volume is going to be EUR 100 million, starting with the building hall, which is completed now and will be finished ultimately in May. Then the spiral hose production will be set up, operational by the end of the year, and productive beginning of 2025 and contributing in 2025. Odry is basically a site with five plants then in hydraulic hoses. It's a highly cyclical commodity, and in-commodity cost leadership is a big advantage.
A megafactory with regards to the economies of scale like Odry is a huge benefit. We don't need to talk about fixed cost base and fixed cost coverage that we have. What we do from this project, as we ramp it up, of course, automation comes into play, a big deal of automation, which leads to cost advantages. And of course, lessons learned and experience gained from the automated processes will then be also implemented in the other factories on the Odry side.
Okay. Two additional questions to that area. How much of the EUR 100 million you have spent so far, and how is it then allocated over the years going forward? So.
Construction has started in 2023, so the EUR 19.4 million that we show as strategic growth CapEx, a little bit more than 60% of that is for the Odry expansion.
And we continue to spend, as you see in the CapEx guidance in the year 2024. This is still the completion of the building, finishing of the interior installation, only in that parts of the buildings that will be operational. And then we ramp it up according to market demand. That means one step in 2026, another one in 2027, until the full capacity is according to plan available in 2023. If the market recovers earlier and the capacity is needed, we're definitely ready to do that earlier.
Okay. You are a little bit flexible on that side. Yeah. Right.
A little bit because, of course, lead times for equipment are to be considered here. It can be 18 months.
Okay. Almost the same area of questions concerning RICO. So you are investing again until 2028 there. So why is that also so long? As I understood it right, RICO was not fully utilized until now and is in some kind of an expansion phase. So maybe you can give us a little bit more granularity where you see the possible driver for increasing of profitability maybe in 2024 and 2025. So is this new orders or prices or higher utilization rate, or what is the main driver here for profitability in the next two years? And then what is the more granular expansion path until 2028?
So thank you for this question, Mr. Obst. When we acquired RICO last year, the previous owner already decided in Austria to expand the capacity with an additional, let's say, production hall. This is a free base, which injection molding machines, automation can be placed for new tools, new, let's say, products for new customers.
It was finished more or less when we took over RICO with, I would say, 70% or 2/3, and it was finished then in October. The first Arburg machines could be transferred from a leased building nearby to this new production building. As we speak today, I would say 80% or 70% of one bay is filled. The rest of the bays are still empty and waiting for new tools, new automation with new customer because the value chain of RICO is a customer has a problem with a certain, let's say, device and need liquid silicone or other polymer product or elastomer product coming to RICO. RICO is designing the product, is making the prototype of tools and product, then producing the high, let's say, advanced tool with many, many cavities, and then produce it in Austria, Switzerland, or in the U.S. This is the value chain.
When you are having a global customer, is it one from Australia? Is it one from the U.S. or from Europe? Then the customer has two choices: buying the tool from RICO and produced by themself, or buying the tool by RICO and let produce by RICO. And this is exactly why the expansion was needed because the most high-advanced tools in this industry are made by RICO. This means, as an example, 258 cavities shots in 12 seconds. This is the record, I would say, shown last year in exhibition with Arburg. And the second fastest was 128 with 26 seconds. This means when there's a problem in this industry, the customers come to RICO and say, "Help me to solve the problem." And this is the expansion in Thalheim.
The building is ready, not filled yet because we want to fill it with profitable business and not just fill it. This coming step on step are the next years into this factory. This means the biggest part of this EUR 40 million, which was described on the slide, is already spent, and a smaller part is in the U.S. In the U.S., in Florida, is SIMTEC, which is part of RICO. There was one big building, and so far, Semperit or SIMTEC has leased only half of the building. It was nearly a condition when we took over RICO that we need the second half because there's also demand in the U.S. market. On healthcare, automotive, etc.
Luckily, in February, just a couple of weeks ago, we could sign the lease agreement for the second part of the building that we have the opportunity to extend there as well. The Capex for this is EUR 2 million to be ready, adjust the building to be ready to harvest, let's say, the potential in the U.S. as well. Switzerland, we have a plan. It's a more long-term plan. It's the beauty factory in RICO, very high margin in healthcare, special customer base, and the space is limited. So we will evaluate the options, and then we will decide, let's say, in the next years what to do exactly to support this beauty factory as well.
The biggest part of the CapEx, as Karl has elaborated, it's basically a space problem RICO was facing to put the machines.
The next part is basically to invest into ARBURG injection molding machines as well as the automation that goes with it. But of course, we want to increase operational efficiency as well before we buy new machines. The space somehow you know from the CFO, it's always attractive to have space restrictions, whether it's production or storage space. Is the Thalheim site still profitable? Say again, please.
Is the site in Thalheim, is that still profitable?
Yes, profitable. Yes. As you have seen, EUR 7.6 million EBITDA contribution for five months in last year. But this is the entire RICO, not Thalheim only. Yeah, of course. But Thalheim is the expertise center of the tool making. This means Switzerland and the U.S. having a tool maintenance shop, but the tool making itself is in Austria, in Thalheim.
Okay. Last question is concerning personnel expenses. So you had this approximately 12% increase last year. So what do you expect in your current structure going into 2024?
We had the biggest increases in Poland in 2023. Czech Republic was still a high increase but moderate. Austria, of course, was a very high increase. So we pretty much know the situation for the Czech Republic, which will be in line with last year. Poland is still in negotiation. Austria, as you know, collective bargaining for the chemical industry is still in negotiations. It's a concern because you saw in the EBITDA average, EUR 10 million cost driver. This is predominantly coming from rate inflation because we reduced headcount actively also in overhead areas. But this is certainly something for particularly our European sites. We need to monitor closely. And I think, Karl, you wanted to add something on the negotiations. Yes.
In Austria, in April, it starts the chemical CLA negotiation. If you go by the inflation, let's say, April last year until end of March, it will be around 6.3%. It will be tough negotiation in the chemical industry. Let's see how this goes. I expect many rounds, and maybe in worst case, a strike will happen as well. But let's face it, we need to be very, very prudent in the salary increase in Austria.
Okay. In your calculations, there is a mid to high single-digit increase again for 2024?
Yes. On average, yes. Yeah. Okay. Thank you very much. So I'll step back in the line. Thank you very much.
Thank you. Our next question today comes from Sven Sauer with Kepler Cheuvreux. Please go ahead.
Hello. Just a quick question on the 2024 guidance, the EUR 80 million in adjusted EBITDA. I was wondering if you could provide an indication if this is based on a further volume decline in 2024 or possibly a volume increase. That would be very helpful. Thanks.
Mr. Sauer, thank you very much for this question. You remind yourself, let's say, six months or nine months back, 2023, we had still the tailwind from the order book in 2022. This means the order backlog, the order book from 2022 was very, very high in this year, means hoses. And so we had high prices and still a good order book. And so the first two quarters last year were more or less a result of the strong position in 2022. This means this year, we are already in the, let's say, downturn of the construction industry. Therefore, we don't have this tailwind, what we had last year in the first two quarters.
Therefore, what we see towards the end of the year, hopefully, certain, let's say, better order intake will arrive, and then we could achieve certain positive contribution. But from today's point of view, the year 2024 will be, let's say, impacted from this economic downturn, which you know is nearly everywhere.
And let me add, Sven, the two divisions are impacted differently, absolutely differently, because you have the highly cyclical business with the Profiles and the Hoses. With Profiles, actually, kind of bought them out already. And then we have the Semperit Engineered Applications that are in a different cycle. Belting is doing really well, and we anticipate it to continue in 2024. The Form business with specialty applications, specialty niche markets, this is not driven by the overall cycle as much.
RICO, here we see some effect from call-offs, from cyclicality, but of course, leading indicators are positive with the construction of the tools. So yes, overall, we see a volume impact. Yes, the question will be, when is the timing of the recovery in the market? If you look at leading indicators like the order books of the yellow goods manufacturers like Volvo, Caterpillar, that published their figures, it will be the challenge for 2024, probably in the second half, late 2024 that we see that. But we still have the ambition to increase volumes.
Great. That was helpful. Thank you.
Thank you. And as a reminder, ladies and gentlemen, if you'd like to ask a question, please press star then one. Our next question comes from Markus Remis with Raiffeisen Bank International. Please go ahead.
Yeah. Good afternoon, Chance. I have a question related to the surgical glove business and kind of the development that you've baked in the fiscal 2024 guidance. So we've seen an increase in the EBITDA loss to EUR 6 million. Anything you can tell us about the earnings trajectory that is incorporated in the EUR 80 million guidance and also with regards to the top line? It looks as if it has been remarkably stable. So you had EUR 20 million revenues in the first half, 2021, in the second. I have everything pretty evenly split across the quarters. So is that the run rate is EUR 40 million sales? Thank you.
Yes. The run rate you can easily see by the adjustments that we've been showing, which was basically the intercompany business. I think EBITDA-wise, it's very easy calculating. It's going to be a small positive, close to zero EBITDA. It's a contract manufacturing that we do for one customer, for HARPS. So going forward, it's not going to be a drag on EBITDA. And I would say the top line performance, of course, depends on latex prices. It depends predominantly on cost. We do it on a cost-plus basis. And as raw material is going to swing, we'll see top line swing. But we continue to report it as a separate segment. So you're going to see that over the course of the year in great transparency. EBITDA, minor impact.
And just I would like to remind you, last year, 2023, is not the reference year in EBITDA for surgical gloves because it was a split year. Until the end of August, it was full in our P&L. And up from September until December, it was in contract manufacturing, more or less a neutral EBITDA, what Helmut explained.
I think that's what you pointed out with Q4 when you look at Q4. But of course, since it's a cost-plus, it always depends on latex prices and raw material prices, energy to some degree.
Okay. So this break-even EBITDA that we would see on a standalone basis in Q4, that is kind of a reflection of the true underlying trends going forward.
Very simple. Yeah. And if we deviate, it's just timing, yeah, because it's one month removed that, of course, transition services are invoiced.
Okay. Then on the topic of raw material pricing, maybe you can shed some light on the trends that you're currently seeing and to which extent raw material can be an earnings tailwind in 2024. So if you could run us through your most important parts of the raw material field, please.
So the raw material, what we see the last weeks and what is our forecast, it's a side movement. We do not expect, let's say, raw material will reduce or will sharp increase. It's a sidewards movement. And therefore, from that point of view, I would say more or less a stable factor. Logistics costs, of course, what is according to the issue with the Houthi, it goes via South Africa. Container costs are a little bit more expensive to a $5,000 container. This comes on top, but by far not the, let's say, extensive costs of $20,000 two years ago. So from that point of view, supply chain is stable. Our, let's say, split of suppliers are very stable. And so we see from today's point of view, an unspectacular year ahead of us.
But of course, we drop to some degree safety stocks.
Priority of procurement is now, again, price because if you don't have full utilization in all of the businesses, it becomes less dramatic when you have to go down into your safety stock. And this is certainly also a combination together with the working capital targets that I've talked about previously.
Okay. Very clear. And then I have to come back to one of Christian's questions on the CapEx. I mean, I get the point that there will be very much a discretionary element to the growth CapEx that you're deploying. But can you give us at least a direction for 2025 if you expect CapEx to be above 2024 then?
Yes. I mean, we have a clear guidance out with the EUR 70 million, and 40% of the EUR 70 million is going to be growth, which is predominant for 2025. I'm sorry. I'm missing this. For 2025.
For 2025. Kind of a directional or brackets with the current base case scenario that you have.
I mean, the maintenance CapEx is not going to change dramatically. Expansion of RICO, of course, depends on the product-market combinations. Also, how far our customers are in the step up in their production because that's certainly also the demand and the call-off situation, particularly in the medical device industry where we see high demands, but also ramp-up curves have gotten a little longer. And for maintenance CapEx, the guidance will be similar to 2023 and 2024. I see no big changes unless, of course, there's changes to the industrial base. And with growth CapEx, I mean, we continue like in 2024, the continuation in investments in Odry and then opportunistically when we see the demand in RICO.
From the growth CapEx, we have an idea how to expand our long length hoses in the U.S. We are looking into this as we speak. So we have not decided when exactly this comes, but this is a CapEx of around EUR 10 million. Then when we do it exactly, it needs to be decided in the future. And you remember.
Strength should be higher. So from all that, what you've just summarized, 2025 CapEx should be above 2024.
Yeah. There's some inflationary impact. Yes, of course, nominally, in real terms, yes, we have good ideas in order to grow the business. And the maintenance CapEx part, it's not pure maintenance like pure replacement. It's also smaller growth projects, efficiency enhancements, digitalizations. So yes, you're right. Yeah.
Okay. Thank you. Okay.
Thank you. And that was the last question. I'd like to turn the call back over to Mr. Haider for closing remarks.
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