Ladies and gentlemen, good morning from Vienna to our conference call on the results for the first half of 2023. I'm pleased to introduce our CEO, Klemens Haselsteiner, who will guide you through the presentation, summarizing the key facts and figures of H1 2023, as well as providing you with an outlook on the full year 2023. After the presentation, we are happy to answer any questions you might have. With that, I hand over to Mr. Haselsteiner.
Ladies and gentlemen, good morning, also from my side. We start on slide 5. We are in challenging times, especially in the construction industry. This is what you can read in the daily news flow. Nevertheless, I can report that we were able to achieve both a higher output volume and a higher result in the first half of 2023, despite this environment. If you have a look on the output volume in H1, you will see that we had a very strong second quarter with another high growth rate of 8% year-on-year, after a plus of 10% in the first quarter. You can see there is no major slowdown, and we can report a strong top line growth of 9% in the first half of 2023.
Ladies and gentlemen, we are confronted with high inflation, even more rising interest rates, and tightening lending conditions. In this environment, we were able to further increase our already very high order backlog. Compared to year-end 2022, the backlog grew by another 2% to now EUR 24.3 billion. If you compare this figure to our guided output volume, you will see that our backlog stretches already in the fourth quarter of 2024. This gives us already a comfortable starting position for the next year. At the bottom line, you can see quite an impressive development. EBIT is up by 37%, which corresponds to EUR 87 million. This is primarily due to earnings enhancements in a variety of different markets, for example, in Southeast Europe or also in Poland, but also due to the omission of former charges on earnings.
Balance sheet and cash position remain very robust in H1, with some typical seasonal effects that we see basically every year. We continue on slide six. If we have a look on the performance of the underlying markets, we notice the following: On the one hand, a very solid business development when it comes to infrastructure in the majority of our markets. This is especially true for transportation infrastructure. On the other hand, we see, I would call it declining tendencies in building construction in certain markets. This is primarily due to lower activities in the residential construction. In Austria, this effect is most pronounced as there is a combination of high mortgage rates and at the same time, tightening lending guidelines for residential construction loans.
So Austria is one of the few markets where we see a decline in our order backlog, backlog of 5% year-on-year. In building construction, we have a very diversified portfolio and recently noticed positive tendencies when it comes to the construction of commercial and industrial facilities. Overall, our activities in residential construction accounts for less than 10% of good output volume, which provides us with a good position to counterbalance negative developments in this area. Also, just to be clear on that, STRABAG is basically not active in the construction of single-family houses, what we consider to be one of the most affected segments in the current environment. For the near future, we expect the shift from private to public contracts, which has already started last year, to continue.
As you might recall, more than 60% of our customers relate to the public sector, which gives us a good position in this respect. Ladies and gentlemen, under the current circumstances, we keep our very high level of order backlog above the EUR 24 billion mark, a strong signal in this environment. STRABAG has again proved to be able to balance out declining tendencies in individual construction segments. This is due to a good portfolio mix, both in terms of geography and construction segments. We continue on slide eight. As you can see, we generated an output volume of EUR 8.3 billion, with strong growth dynamics throughout the entire first half. This is a new record mark in the first half of the year.
Major drivers for this development were the ongoing execution of a very high order backlog, mild weather in the winter months, and some inflationary effects, but especially when it comes to material and energy, we have noticed some easing at a high level since the end of last year. In absolute terms, our home markets, Germany and Austria, contributed most to this growth. But I can report that especially Romania, the United Kingdom and Poland, also contributed significantly to the high growth rate. We see some declines in the Czech Republic, in Denmark and Sweden. However, this is nothing which surprises or worries us, because in the Czech Republic, we see strong competition in transportation infrastructure, but our strong order backlog gives us the flexibility for a more selective approach in bidding. When it comes to Scandinavia, the decline is basically as expected and planned.
We recognized our business there from in the past large scale and now mid-sized projects to the high competition due to the high competition in these markets. Therefore, it is clear that with the execution of larger projects from the past the output volume naturally comes down in these markets. Ladies and gentlemen, our order backlog is still very high. It exceeded for the first time the EUR 24 billion mark in first quarter 2023, and we managed to keep this level with an order backlog of EUR 24.3 billion at the end of the first half. So you see an increase of 2%, 2% compared to year-end 2022, or of 1% if compared to the same period of last year.
We recorded significant growth, above all in Germany, but also in Romania and Croatia, as well as in Italy and Poland. Due to the ongoing execution of large and mega projects, we see some declines in the Americas and also in the United Kingdom. In Austria, the backlog declined by 5% in H1. This is primarily driven by a strong downturn of the residential construction market, as I outlined before. Let's move on to slide 9. We are very pleased with the earnings performance in the first half, all major KPIs being up substantially versus H1 2022. The EBITDA, earnings before interest, taxes, depreciation, and amortization, came in at a bit more than EUR 350 million in the first half, a +8% year-on-year.
Depreciation and amortization expense is slightly up by 1% to EUR 264 million. So we generated an EBIT of EUR 87 million in H1, up 37% year-on-year. Ladies and gentlemen, this is the highest-- the second highest EBIT STRABAG has ever achieved in H1, after the all-time high in H1 2021. But as we communicated in the past, 2021 was an extraordinary result and cannot be compared with the long-term earnings performance of the group. The North and West segment contributed most to this growth. The EBIT of the South and East segment, as quite common in the construction industry, was negative in the first half, but we were able to considerably optimize this figure.
If you have a look at the P&L statement, you will see that we show a very strong net interest income in the first half of 2023. This is basically due to our high cash position, where we now have quite an advantage in the interest rate environment. So net interest income accounts for EUR 27 million, compared to EUR 6 million in the first half of 2022. The EBT, earnings before taxes, reached EUR 114 million. The income tax rate came in at 33%. So as a result, net income after minorities reached EUR 74 million, also strongly up compared to our corresponding value in 2022, which was around EUR 40 million. We continue on slide 10. As you can see, our balance sheet has remained very robust.
We still report a very solid net cash position of EUR 1.5 billion at the end of the first half. On this slide, you can see the seasonality effect we always face in the first half due to the build-up of working capital. However, as the increase in working capital was not as high as last year, the net cash position is higher than in the first half of 2022. We still see a very solid level of customer prepayments. Nevertheless, we expect this figure coming down to our normalized level, basically due to the ongoing interest rate turnaround. The equity ratio is still comfortably above our internal target of at least 25%. So we have a significant headroom as we report an equity ratio of 32.6% at the end of the first half of 2023.
At the year-end of 2022, there was a purchase obligation for their own shares in connection with a mandatory offer. As we eventually bought back a lower number of shares, the difference was brought back to the retained earnings. So retained earnings increased by a bit more than EUR 290 million due to this effect in the first half of 2023. And I want to conclude with, that the solid financial position of STRABAG is still reflected in a BBB investment grade rating from S&P, outlook stable. Let's move on to slide 11. I have already spoken about our high cash position. We report cash and cash equivalents of EUR 2.3 billion at the end of H1 2023. If you have a look on the cash flow statement, you can basically see the following development.
Cash flow from operating activities returned to positive territory at EUR 175 million. This is due to a lower build-up in working capital, despite a very high growth in output volume. Cash flow from investing activities reflects on acquisitions of several businesses, above all, the acquisition of Bockholdt in Germany, which is a major facility management service provider. These acquisitions cost more than compensated for the lower investment in intangible assets, property, plant, and equipment. Cash flow from financing activities reached EUR 292 million in the first half, and was more negative than in the first half of 2022. This is due to the fact that the acquisition of the own shares is included and the distribution of the dividend for 2022.
In the last year, the dividend was not included in the first half of the year because the distribution took place in the second half of the year. With slide 13, I begin the operational review on the first half of 2023. All operating segments were characterized by high output, high output growth, and continued high order backlog. Earnings enhancement could be achieved in the North and West, and in the South and East segment. In the Northwest segment, we report our activities in Germany, Switzerland, the Benelux countries, and in Scandinavia. Ground engineering can also be found in this segment. The geographic focus of the South and East segment is on Austria, Poland, the Czech Republic, Slovakia, Hungary, and Southeast Europe. The environmental technology activities are also reported within this segment.
The construction material business, previously reported in the International and Special Division segment, was incorporated into the South and East segment by the first of July, 2023. This is to bring the material business even closer together with the operating entities, in order to promote circularity within the group, as one of our core topics of our Strategy 2030. Last but not least, the International and Special Division segment includes the tunneling and activities and concession business. The real estate business, ranging from project development and planning to construction, operation, and also property and facility services, completes the wide range of services in this segment. Additionally, most of our activities in non-European markets are also reported in this segment. On slide 14, we take a closer look onto our largest segment, North and West.
In this segment, we recorded a 7% higher output volume of EUR 3.6 billion in the first half of 2023. This development was primarily driven by the strong performance in our home market of Germany, both building construction and civil engineering, as well as transportation infrastructure. EBIT grew significantly by 82% to EUR 63 million, partly due to the omission of last year's charges against earnings from large projects in Denmark and the Netherlands. The order backlog came slightly down on a very high level by 3% to now EUR 10.5 billion. The fulfillment of large projects in building construction and civil engineering contributed to this development. A solid order intake was recorded above all in Germany and Switzerland. The shift from private to public orders has continued.
Coming to the outlook for the segment, for the full year 2023, we expect a slight increase in output volume, despite the challenging general market environment. Our continued high order backlog supports our outlook. For the German building construction sector, we expect the following: Material and energy prices continue to show signs of normalization at a high level. A strong downturn in the residential construction market in light of high inflation and the ongoing interest rate turnaround. We expect the shift towards private industrial construction and the public sector to continue. The order backlog in the German transportation infrastructure business remains high. This will allow us to continue our selective approach to bidding for the rest of the year. Due to persistently high competition in the Benelux countries and in Scandinavia, we will continue our approach of selective bidding.
Our organizational and strategic adjustments in Switzerland are showing positive results. We expect this positive development to continue in the second half of the year. Now coming to our South and East segment on page 15. Output volume grew by 7% to EUR 2.8 billion in H1 2023. Growth was recorded primarily in Austria, Romania, and Poland. By comparison, output declined in the Czech Republic and Hungary. In Hungary, the number of public projects decreased as a result of withheld EU funds, but the private sector continued to show a positive development. As is quite common in the construction industry, the segment's EBIT was again negative at -EUR 16 million. However, we were able to significantly improve earnings in the South and East segment in a year-on-year comparison, supported above all by a positive development in Poland and Southeast Europe.
A solid growth of 7% to EUR 8.3 billion can be seen in the order backlog of this segment. Romania, Croatia, and Poland contributed most to this growth. In Austria, the order backlog declined by 5% year-on-year, due to the aforementioned effects in residential construction. Concerning the outlook for the South and East segment, we expect a slight increase in output in 2023. Austria is facing a significant drop in demand for residential construction projects. There are signs that this can be partly cushioned by new projects in the industrial construction. Demand for transportation infrastructure is expected to be stable. In Poland, residential construction is stagnating due to the higher interest rates, but there are signs of increased demand for industrial and logistics buildings. Hungary suffers from withheld EU funds.
This leads to a decline in construction volume and to increased competitive pressure. The focus of our business activities in building construction and civil engineering is therefore on private investments. In the Czech Republic and Slovakia, we expect an increase of new tenders in the transportation infrastructure segment. Thanks to our comfortable order backlog, we can continue on our selective bidding in order to protect our margin in this segment. Slide 16 shows the development in our International and Special Divisions segment. The segment generated an output volume of EUR 1.7 billion, which is 13% higher in a year-on-year comparison. In Germany, output was positively impacted by an acquisition in the facility service business. In the United Kingdom and in Chile, the ongoing fulfillment of major projects had a positive effect on the output volume.
With regard to the earnings situation, it has to be considered that the International and Special Division segment is regularly exposed to fluctuations to the large and mega projects. Accordingly, the EBIT came down from EUR 78 million, which can be seen as a high level, to now EUR 51 million. The facility management and infrastructure development business made a positive contribution to earnings. However, these enhancements could not be compensated for declines in the volatile international project business. The order backlog faced a slight increase of 1% to EUR 5.4 billion. Strong increase was recorded in Germany, but we were also successful in Italy and in the Middle East in the acquisition of tunneling and road construction contracts. Coming now to the outlook for the segment.
We expect to achieve a significantly higher output volume for the full year 2023 in the International and Special Division segment. The tunneling business, with major projects in the United Kingdom and Canada, will show solid contributions. In the international business, we expect a high demand for construction services going forward, for example, in the Middle East and in the Americas region. In our property and facility services business, the focus will be on the integration of the Bockholdt acquisition. Furthermore, we expect increased demand for services in the decarbonization of real estate portfolios. In line with our Strategy 2030, we are paying increased attention to the development of renewable energy projects in our infrastructure development business. The real estate development business has been particularly affected by the interest rate turnaround.
However, we have always pursued a prudent acquisition policy and conservative project valuation, which has proven to be robust so far, and pays off now, especially in the current market environment. We continue on slide 18, where you can see our current shareholder structure. In May 2023, we proposed capital measures to reduce the shareholding of MKAO Rasperia Trading Limited. This is a company controlled by Oleg Deripaska, a sanctioned Russian citizen. With the capital measures, we aim to reduce the shareholding of Rasperia to below 25%. This is to prevent STRABAG from any potential disadvantages. On behalf of the entire management board of STRABAG, I would like to thank all our shareholders for their support in the annual general meeting, for the unanimous approval of these measures. The process of implementation has already been initiated.
A brief update on the legal actions filed by Rasperia against the resolutions of 2022, ordinary and extraordinary, annual general meeting. I can report that the Klagenfurt Regional Court dismissed Rasperia's action for annulment of some resolutions of the AGM in June 2022. The Klagenfurt Regional Court also dismissed the second case, the action for annulment brought by Rasperia and Thomas Bull against the resolutions of the extraordinary meeting in May 2022. Thomas Bull was a former supervisory board member of STRABAG SE, delegated by Rasperia. We are pleased that this has now been confirmed by the courts, even though the decisions are not legally binding yet. Also, Rasperia has launched an action for annulment against the capital measures resolutions of the AGM in June 2023.
However, from the beginning, we were convinced that we were acting fully in accordance with the applicable sanction regime, and all decisions so far have confirmed this. At this point, I would also like to report that our exit from Russian market is proceeding as planned. From today's perspective, we will exit the market by the end of the year 2023. We continue on slide 19. I conclude my presentation with an outlook on the full year 2023. I'm pleased to report that we raise our guidance for the full year based on the continued high order backlog and the increased output in the first half of 2023. As a management board, we updated our forecast for the output volume from before at least EUR 17.9 billion to now around EUR 18.6 billion.
We confirm our EBIT margin target of at least 4%. When it comes to the net capital expenditures, the cash flow from investing activities, from today's point of view, we can also confirm a maximum of EUR 600 million. Ladies and gentlemen, this concludes my presentation, and we are now open for your questions. Thank you very much.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please leave the handset before making your selections. Anyone who has a question may press star followed by one at this time. Our first question comes from the line of Michael Marschallinger from Erste Group. Please go ahead.
Yes, good morning, everybody. Thanks for this call and taking my questions. I have three, and we'll do them one by one. Firstly, on the residential decline in Austria, given that there's currently no discussion of an easing in this lending conditions that you mentioned inside, would you expect then this negative trend to continue in the following quarters? Would you expect to further deteriorate it, or what, what's your view currently on this?
Yeah, we expect, we expect it to continue in the next quarters because we don't, don't see a turnaround in interest rates. We expect, if anything, another increase and that will put pressure on the market in the future as well. But I would like to stress that it's that the residential, especially the single house market, is a very slow part of our portfolio.
Okay. So you would expect it in the same magnitude, not further deteriorating, so?
Yes.
Okay. Okay, understood. Then, second question. I would like to understand this decline in international decline in EBIT in international special. You mentioned this volatile business in project and tunneling. Could you maybe explain that a bit more and provide some more color, and should that reverse then in the second half, or?
Well, the problem or the challenge with the international and tunneling segment is that we are talking about mega projects that go on for years, and we always are very conservative in our prognosis of the result. And that means if there are challenges in the construction of such large projects, we have this fluctuation due to reserves of risks that can materialize over the course of such long projects.
Okay, understood. Yeah, and my last question is on the, there was currently some a few weeks, some news out from the Austrian Competition Authority, BWB, that they were successful with the appeal at the Supreme Court and they requested a review of this antitrust decision. And it seems they're questioning your status as a crown witness in the construction cartel case. So could you provide us some updates on the current status? And was it also necessary that you build some provisions for a possible higher fine, or is this not necessary at this point?
So, we remain very confident that after a review that has been ordered of the facts, that our position as a crown witness will remain. So, we remain confident in that, and as we communicated in the past, we have adequate provisions for risks pertaining to this case.
Okay. Okay, thank you.
Our next question comes from the line of Patrick Steiner from Kepler Cheuvreux. Please go ahead.
Good morning, it's Patrick Steiner, Kepler Cheuvreux. Two questions from my side. First of all, in the light of the strong downturn in residential construction, especially in Austria and Germany, what's your exposure to the sector in those two countries? I mean, does it differ materially from your other markets? And secondly, what's your take on new funding in CEE? Are there any change in the current landscape? Is anything expected? Thanks.
Can you repeat the second question?
Yes. The second question was, what's your take on EU funding in CEE? Is there any, any changes expected in the current situation?
So as I said, our exposure to residential construction is below 10%. We see a shift towards more public contracts, but generally speaking, the residential construction is not a major chunk of our order backlog. And that's why we are able to compensate the decline in this area, even though we expect it to continue, we expect this segment to remain challenging. So in considering EU funds, what we see is that there are many public funds for green environment, and that remains very interesting for us to get funding for R&D and green energy projects.
That's where we see a lot of, a lot of potential.
Okay, great. Thank you very much.
As a reminder, if you wish to register for a question, you may press star and one. Gentlemen, there are no more questions at this time. I hand back over to Marco Reiter for closing comments. Please go ahead.
Ladies and gentlemen, thank you for your time and dialing in today. As a reminder, there will be a strategic update on the 7th of September, where we present our new Strategy 2030. We would be pleased to welcome you on site in Vienna or via live stream. All the relevant details and the registration link can be found in this H1 presentation on slide 21. The next earnings release will be on the 16th of November, where we will publish our trading statement for the first 9 months of 2023. For today, we wish you a nice remaining day. Goodbye.