Good morning, dear listeners. Welcome to Novaturas Investor Conference. I'm Amelia from Nasdaq Vilnius, and I'll be moderating today's event. We will start with a presentation from the management, which will be followed by the Q&A session. Please be informed that this webinar is being recorded and will be available for a rewatch on Nasdaq Baltic YouTube channel. I encourage everyone to submit questions in the Q&A section at the bottom of the screen. You can submit them either anonymously or with your name. With that said, I'm pleased to introduce today's presenters: the CEO of the company, Kristijonas Kaikaris, and the CFO, Vygantas Reifonas. Please, the floor is yours. Please unmute.
Okay, thank you, Amelia. Very good morning, dear shareholders. I want to welcome you to the presentation of Novaturas performance in Q4 2023 and full year of 2023. Let me start with the executive summary slide. I'm skipping the disclaimers very quickly. It's my pleasure to present today that Novaturas has demonstrated a very strong financial and operational performance in 2023, and we have achieved a 6% increase in income, reaching EUR 209 million, which is a significant growth also in our EBITDA, which soared to EUR 5.5 million. And this marks a seven-fold increase from 2022. If adjusting for one-time factors, our EBITDA stands even higher at EUR 6.5 million in 2023. Our operational efficiency has also seen remarkable improvements, with a drastic reduction of the number of flights delayed over three hours, now constituting less than 1% of total flights.
This efficiency has contributed to our customer satisfaction, and our Net Promoter Score was steadily growing throughout 2023, reaching a commendable 50% by the end of the year. In addition, we have empowered our employees by rolling out a share option program, facilitating the acquisition of Novaturas shares, and further aligning our team with the company's long-term goals. This move has not only invested into our workforce and continues the investment into that, but also strengthens their ties to the company's success. Going to our key financials of Q4 last year and 12 months of 2024, it's very nice for me to announce that we have maintained Q4 sales at prior year level despite the unrest what we saw in Gaza Strip. The passenger number is only marginally below the prior year volumes, only by 2,000 less, however, at the cost of a lower profitability.
During Q4 we had to optimize Egypt destination by over 9,000 seats, which contributed to a high load factor and enabled us to avoid the last-minute sales-driven profit reduction. Our quarterly EBITDA has been downwards adjusted with one-offs, and that's, that's about the potential GetJet Court Case provision, at the level of EUR 430,000, unrealized loss of derivative portfolio, at the level of EUR 213,000, and a change of accounting policy at the level of EUR 371,000 in respect to IFRS 15, and we have some details, later you can see in slides 16 and 17, in the annexes, which totals to EUR 1 million.
Our quarterly EBITDA without one-offs, that I mentioned is, would be higher than by EUR 1.4 million. In year-over-year comparison, our sales increased by 6%, reaching EUR 208.5 million, EUR 208.5 million, in 2023, and despite a slight decrease in passenger numbers, around -3%, that indicates higher revenue per passenger.
Our gross profit for the year saw a significant increase to nearly EUR 27 million, with a gross profit margin standing strong at 12.9%, reflecting effective competition strategies. Our 2023 EBITDA stands at EUR 5.5 million, again EUR 6.5 million if one-offs excluded, and it is our highest EBITDA since 2019 and third best in the history of Novaturas. Next to that, our load factor is up by 1 percentage point, and it stands at 95% in 2023, which indicates a robust demand and efficient capacity management. We have also managed to improve sales profit per passenger. There was a noticeable improvement, from EUR 29 per passenger in 2022 to EUR 57 per passenger last year. Despite the turbulent Q4 performance, it is a testament to Novaturas' ability to maintain the relevant profitability per customer. Moving to the next slide, focusing now on the passengers.
In Q4, our passenger numbers showed a varied trend across the Baltic countries. Lithuania experienced a steady growth over three years, reaching EUR 26.7 million in 2023. In contrast, Latvia and Estonia saw a decline in 2023, with passenger numbers dropping from EUR 10.8 million and EUR 11.6 million, respectively, per country. The reason behind is the difference in speed at which mass summer and winter destinations, which are, as we see, Turkey and Egypt, are being diversified within respective countries. The average selling price of trips increased consistently from 2021 to 2023, indicating a positive trend in customer revenue per customer.
The diversification strategy, our diversification strategy, as we see, is paying off, as reliance on highly competitive, and also top-level destinations like Turkey and Egypt, has decreased from 73% in 2021 to 61% in 2023, which showcases a successful redirection of our customer, into new markets and also a possibility, possibly a more robust business model, which is less dependent on a few destinations. Looking at the market dynamics, Turkey and Egypt remains, as previously, our top summer and winter destinations, and these two countries account approximately around half, 50% of our total passengers served. At the time, both are facing, very intense competition. During 2023, Novaturas has successfully introduced, for its customers customer benefits of Tunisia and Montenegro in combined, increasing PAX share from 6% in 2021 to 14% at the end of 2023.
Looking at Bulgaria, Spain, and Canary Islands, these destinations remain stable, while Greek islands went down from 14% in 2022 to 11% of passengers served in 2023. Most notable, Greek losses relate to Heraklion and Rhodes Islands, latter island being affected by July wildfires. I think everyone remembers the wildfires we had last summer in Rhodes. So among other destinations, if we look at Italy and Portugal, mainly that's Madeira Island, and long hauls are also our key markets. While Italy and Madeira increased their share to 0.5%, long hauls contributed to 1.2% share increase along with widening selection of destinations. So to enable our customers to plan their trips, we usually announce our winter and summer destination trips sales at about half a year before the season starts. Full summer 2024 program has been announced on September 13th.
As of now, Novaturas already sold summer 2024 travels for 56,000 passengers, which is 2,600 down from the previous year. Shift towards less mass destination is being continued with Turkey and Egypt being 38% of total April-December 2024 bookings against 46% from previous years, previous year. This reduction is balanced increasing tours to Greece, Italy, and Spain. Okay, looking from customer at customer perspective, we have seen a steady increase in Net Promoter Score over the four quarters of 2023, starting from 37% in Q1 to a peak of 55% in Q3 before a slight dip to 51% in Q4 during the winter months. Our four quarters NPS, Net Promoter Score, lands at 50% with Lithuanian market being at 60%, Latvian market at 58%, and Estonian market at 30%.
From quarterly perspective, Estonian market is on an equally upward trend from 11% 11% in Q1 to 41% in Q4, following improvements on the number of on-time flights. So, among best-rated customer destinations are Greek islands, Bulgaria, Turkey, Tunisia, and Montenegro, with Egypt being slightly below average. As mentioned as I already mentioned, we have significantly improved our on-time performance, reaching an OTP of 93% at its peak in Q3, last year, indicating a more reliable flight schedule and enhanced customer experience, which is very, very important. The Q4 OTP reflects the anticipated seasonal impact, with winter weather conditions necessitating additional de-icing procedures, contributing to a slight decline from 93%, peak of OTP achieved in Q3. The number of flights delayed over three hours has decreased 3x , from 68 to 23. During last year, all markets experienced single-digit delays over three hours.
Lithuania and Latvia only seven, Estonia a bit more, nine, which is down from double-digit delays in 2022, when Lithuania had 10, we had 23 in Latvia and 25 over three-hour delays in Estonia. So the improvement is really significant. Again, I want to stress that it's 3x better compared last year and 2022. Moving to the next slide, the recovery of sales decline following the launch of our website in August, which we discussed a quarter ago, actually is more challenging than it was anticipated, and during Q4, web sales dropped by 32% compared to the last quarter of the previous year. Our own retail has been resilient to web technical challenges and shows only marginal reduction of its share during Q4. Travel agencies' share has, during a quarter, increased by 5 percentage points and drove up quarterly effective commission from 5.7%-6.4%.
The development and strengthening of our own sales channel, including both retail and web, continue to be a priority for us, for Novaturas, aiming for greater control over the customer experience and margins. On a 12-month basis, share of retail continues to be on growing mode, growing its share within sales about 2 percentage points each year. Web share, as mentioned, has been negatively affected by an unplanned post-launch challenge, last year, removal of which, and again, respective web sales increase is our current top priority. The share of our own channel continues to be above 30%. Effective annual commission rate stays at 5.8%. Novaturas, we remain the web traffic leader, and we hold almost half of the total traffic in the Baltics. It's 46%. Our main developments during Q4, it's web search functionality, which was upgraded down to the hotel level.
We have also introduced a flexible travel planner calendar and also the labeling of hotel sustainability or exclusivity. Moving to expenses, the growth of Q4 expenses has been limited to 5%, half of which relates to certain staff one-offs. The SGA to income ratio saw a slight increase from 6% in 2022 to 6.3% in 2023, but which remains within the expected range, and it demonstrates a controlled growth in line with our revenue increases. Staff expenses, which constitute 62% of our group's expenses, have increased by EUR 1.6 million, which is 38% year-over-year, driven by introduced means of staff acquisition and retention. That's basically reward programs, promotion of our own channels, and destination diversification, as well as maintaining of general market presence, causes an increase in advertising and marketing expenses.
Selling, general and administrative expenses to income ratio remains slightly below 5.2% and 5.5% trend, which has been usual for the group within normal operating years and past periods. What is our outlook forward? Looking at 2024, the current year, we are projecting our passenger numbers to be from 240,000 - 280,000, with revenues of EUR 200 million-EUR 220 million. In a broad sense, we aim to match the previous year's results. However, due to current market dynamics, an exact forecast is not available. Our technical objectives for 2024, our first one, we continue developing our sales channel, focusing on operational efficiency and customer service. Second, we will enhance our revamped, renewed website to fit-for-purpose state and further digital initiatives, ensuring early access and improved convenience for our customers and partners across all digital touchpoints.
The third one, we want to sustain our diversification program by offering the widest selection of destinations in the region, which allows us to balance profitability in a highly competitive environment. And the fourth one, it's about restructuring the organization to support customer-centric and data-driven operations with a specific emphasis on execution. Okay, so I covered all the slides. I hope you have seen a lot of useful information, but as always, I believe that you have some questions. So let's move to the Q&A session.
Thank you for the comprehensive presentation. Now we'll proceed with the questions. Before that, I would like to remind everyone that you can submit the questions in the question box below. The first couple of questions we received were in advance, and they're regarding the proposed dividend payout.
Okay, so our position on dividends, the issue of dividends, will, as usual, be decided after the publication of the audited results for 2023, and the audit is being conducted in accordance with the scheduled procedure, with the results expected to be announced in April. The distribution of dividends is subject to the decision made at a general meeting of shareholders, as well as the requirements and permissions of companies' creditors. So, you know, stay tuned for this. First, we are waiting for the audit results, which, as I said, will be in April.
Any update on board priorities presented during the first half of the investor call?
I'm sorry? I didn't hear the question. What was the question?
Any update on board priorities presented during the first half investor call?
Actually, since the current economic uncertainties and also the conflicts what we have in the different places in the continent, we keep the priorities which were set, you know, half a year ago. We continue developing on them, but because of the mentioned uncertainties, we are currently revising not our tactical strategies, as I already mentioned in the presentation, but we are also looking into organizational structure so to have our own answer to increased competitive environment and, of course, the mentioned the uncertainties. So, to answer, we stay on the same line.
We continue the same direction, but since we have shown at Novaturas throughout, you know, our history, and this year we are celebrating 25 years, our experience and know-how allows us to be very dynamic and very quick decision-making, reaction to do the quick decisions and react to the market situation, with the aim of keeping our EBITDA profitable, positive, which is our main target also for 2024.
Would you please elaborate more on the competition?
Yes. Lithuania, Latvia, and Estonia is seeing probably the highest competition levels in our history, which is very good for our customers, and it shows that, you know, the supply of seats, the destinations, and looking at the destinations, we have the highest variety of destinations is very, very appreciated by our customers. So, we are always looking at all the destinations, at you know, the sales speed and our customer demands and also the competition, to really focus our priorities on certain destinations. We are, as I said, having the long experience and know-how. We are always reacting quickly with our tactics and strategy if needed, and we are competing, as last year showed with the results, very successfully. So competition is high. It's good for the customer. Customers have a very wide selection of packages to select.
This is the environment, five or even six tour operators now competing in Baltic countries.
In the first slide, net profit for the year 2023 is lower than nine months profit given in the Q3 update, although Q4 was very profitable. Could you explain how did that happen?
Yeah, probably I'll take over.
Did we get there?
Yeah, yeah. I'll take over that question. So, in fact, our Q4 is not profitable. I think we can see on the slide that we experienced a loss of EUR 2.0 million; the EBITDA is negative, like EUR 2.4 million. The net profit's minus EUR 2.7 million during the Q4. So, basically why this happened, so, as already been mentioned, about EUR 1 million is one-offs, which namely is the provision for GetJet court case. Then we have some unrealized losses from derivatives, which previously we didn't book as neither income or expenses. And finally, we also have some impact from the change in accounting policies, which we implemented this year that basically improved our prior year results at the cost of the current year. So totally, this was the impact during Q4 accounted for EUR 1 million.
And then, the rest is from Q4, like normal operations, which, mostly driven by two factors. So one of them is the, I would say the Egypt destination, lower profitability than we've been expecting previously, and that's been, again, driven by the, all these, turbulences in, in, Q4 related to the Israel war. The second thing is, the problems that we faced with launching our, the new website, which, again, slightly, reduced our, like, or negatively impacted the share, the distribution share, moving sales more towards the commission-based channels out from commissionless channel. And totally, we've got EUR 1.4 million loss on Q4, because of two of these factors mainly. So that's why Q4 was unprofitable, and this is why our annual profit is lower than the Q3 profit.
Do you plan to change current strategy?
There will be, we currently are not planning the total overhaul of the strategy. As I mentioned, we continue on the same priorities. The only thing, as I also said, also by answering one question, is to, you know, we as all businesses, we need to be very agile and responsive to the market situation and also to the competition in Lithuania, Latvia, and Estonia. So, we are looking at certain technological advances what we can implement very quickly, or mid-term, especially on digital customer experience, and also on tools to make us more effective in executing the best holidays for our customers. So, I think more or less, destination-wise, performance-wise, we are not currently planning any strategic overhaul, but mostly, you know, very dynamic market, as we all know.
We need to be reacting. We need to know very well what's happening and how to react. So if that requires a bigger strategy change, of course, we will implement it as soon as possible, and we can talk about that after the quarter.
Could you please elaborate a bit more on the pricing environment for travel abroad? Have the package prices stabilized or maybe some downward pressure due to dedicated customers and competition?
As always, when there is more offers on the table, the prices are fluctuating. Sometimes, they go to some lower levels, but again, that allows us and our competitors to sell the travels earlier. So it's not that simple to do any predictions. Currently, this is why we are not presenting the very detailed forecast for each quarter for the passenger numbers, as I have shown in the slide, you know, looking forwards. So, yeah, the prices at the first two months of a year have shown some lower costs in certain destinations. But I think this is very good, you know, for customers because, you know, the loads are coming in and the travels are selling earlier. So hopefully that will allow to have less, you know, last-minute discounts, which can be negative.
Please elaborate more on the 36% staff cost growth?
Yeah. So, basically that was some reward things, which is share option program and the annual bonus. Compared to prior year, you can also see this on the annual profit levels that this year the profits is positive while last year it was negative. So this, I think, contributed roughly about EUR 500,000. Then, we have increased in staff about 12%. So that's, again, from annual perspective about EUR 500,000, plus salary inflation, roughly at 8%, so EUR 400,000. So this basically drives staff costs up during the year.
What is the plan for customer growth looking forward?
For us, the main priority is profitable business. So we want our EBITDA as high as possible. And we want our net profit also to be not less than last year. It doesn't mean that with the passenger number growth, our financials are, the results are becoming better because, you know, competing for the market, it has its own cost. So this is one of the areas where we are carefully and dynamically looking at the situation, at the competitive situation, at market uncertainties, and doing adjustments, optimizations, in various areas, to ensure that our business results show profit. So answering on the growth, it's not necessarily, you know, more customers taken to the destinations, if we compare to our key KPIs, which is profitable business.
What is the EBITDA margin that you are aiming at during the normalized cycle, and how are you managing cash on hand?
Also, EBITDA margin we are aiming is about between 2.3 and 3 percentage points out from sales. Given the current, like, structure of Novaturas, it shall change along with our kind of digitalization that we're aiming also to perform, but at the moment it's about that. How we are managing cash via cash flow forecasts on one hand. On the other, we are also I have some bank limits, so it's basically a combination of those two.
Where do you see the share of owned web sales in 2024, and have any Novaturas website problems been solved?
Yeah, we have a comprehensive plan, which is basically focused on solving the technical and, you know, launch issues, which prevailed for much longer period than anticipated. The task was very complex and big. Basically, we are talking not only about just the website, you know, we are talking about the e-commerce channel as a whole. So it's rather normal that with an update of the e-commerce website, it organically goes down, but then it has to pick up the cadence and start growing. In our case, we faced last year certain technical issues, which are being solved, but we have a very strong roadmap to really make our website, our e-commerce site, the best in the market.
We are now looking at the technologies, like artificial intelligence, to really transfer the physical experience of our customers to the virtual experience, with the aim of helping the customer in a most simple way and most convenient and convincing way to get the destination, the hotel, or hotels for selection, for their dream vacation. So, one of our main focuses is on this channel, developing our own channel, because, you know, our e-commerce site, our website also contributes not only to our sales through the web page, but also it contributes to our travel office, to our own agents, and also to our partner agents, because this is the source of information for the selection, for understanding of the availability, etc. So, our website, our e-commerce channel is our main priority currently.
Talking about the share, I see the high ambition this year to go to 1/5 or 1/4 of our sales moving to our own website.
Do you expect audited results to be different?
Not at the moment. I mean, if we would be expecting, we'd probably be already presenting them, so not at the moment.
Was Egypt positive or negative during Q4?
Negative.
Any guideline on CapEx plan for 2024?
Yeah, as we want to strengthen the digital channel, there are some investments assigned or for investment into the digital channel, not a massive amount, but there are some.
What is the current dividend policy? Is it still 70%-80% of the net income to be paid out?
Yeah, the policy remains the same. However, as Kristijonas already mentioned, the final decision on dividends to be taken after we have audited results at the board meeting.
It looks like we've covered all your questions so far. On behalf of Novaturas, thank you, everyone. It was a pleasure being with you today. The recording of the presentation will be available on Nasdaq Baltic YouTube channel. Thank you for a very informative conference.
Thank you, everyone. Bye-bye.
Thank you.