Hi to everyone. Thanks for coming today to this investor conference for us presenting Q3 nine-month results. Please interrupt me throughout my presentation to answer any questions you may have, or when I finish, if you have more detailed type questions, please be my guest, join me for a discussion. Our Q3 and nine-month presentation. News, we continue to grow. We keep having a habit of breaking records like Q3. It was the highest ever in ASBIS's history in terms of profitability quarter. We'll see more detail. On key corporate events, we made a note on the interim statement that the company will pay a dividend, a preliminary dividend for 2023 in December, but we already paid a final dividend early July of $0.25 a share. We continue this and we will see it in a different slide.
We continue paying a significant dividend out of our profits for seven consecutive years, starting 2016, and we have a tendency to continue to pay a significant dividend payout to our shareholders. On the retail side, we managed to agree with TK Maxx stores, another significant retail player, because this is becoming more and more significant for our business. We aim to grow further the retail business. We have a lot of product lines available to this business. Logitech is a big one. B&O, Bang & Olufsen, is also significant. TCL, Loewe and a lot of other brands to address the retail channel. We continue with new products and solutions in the markets where we trade, as a means to further grow the top line, but also more importantly, maybe the bottom line of the company. Revenue growth continues.
Historic numbers, even September last year was highest ever. We managed to overachieve that by even 4% this year. We continue the growth. You can see the chart. There is growth potential with the existing suppliers, especially considering expansion to new markets. Talking about new markets, given the growth in Central Asia, mostly with Apple, but not only, we established a hub, a distribution center in Georgia, coming closer to the customers. Throughput time is much less, therefore, we give better service to clients. At the same time, very recently, we established in Johannesburg, South Africa, a regional hub to being able to address business in the sub-Saharan region. We expect extra franchises from suppliers to enable increased business in the country and nearby countries. On the financial results, Q3 year-on-year comparison, 11% growth on the top line.
Gross profit up by 10% to almost $62 million. The gross profit margin, still very high, 7.99%. Most importantly, the net profit has grown on a year-on-year basis by 11%, reaching $22.2 million. When it comes to key countries, revenues by key countries, Kazakhstan is by far number one, still retaining its number one position. Ukraine, though we've lost business from peak sales of 2021 prior to the war, we are still growing the business with a lot of suppliers. Main one is Apple. United Arab Emirates, still number three, strong business. Slovakia has done a tremendous job this year and has significantly grown the business on a year-on-year basis. We have Central Asian countries also in the top ten league.
Poland is advancing in the top 10 range to number seven, created the necessary infrastructure, and we believe there is a way to further grow the Polish business. Revenue by product lines. Smartphones by far number one business of ours. A 6% growth year-on-year. CPUs, I think we discussed it previous times I was here. We expected a significant growth from CPUs because certain suppliers, specifically Intel, had decreased its business, and we expected a revamp of the Intel business, something we already see in Q3. We see a 50% growth on the CPU segment. The laptops business has lost 14% year-on-year. I don't believe this is a permanent trend. We don't believe this is a permanent trend. It's due to a lot of factors. We expect that to also start picking up.
More importantly and more profitably, servers and server block business, more and more is coming to us, a significant almost 70% growth year-on-year. I repeat, with very high margin, higher than average margin. Revenues by regions. FSU, by far number one. Russia is out, as we all know, but significant growth, we saw it before by countries. Kazakhstan is leading on the FSU side, sales. Ukraine is number two, and we have this -stan franchise countries by Apple growing very quickly for us. Uzbekistan, Caucasus, Armenia, Georgia, Azerbaijan growing very quickly for us. Central and Eastern Europe has made a significant increase in sales in Q3. The leader is Slovakia, has done tremendous business. Also project business, very profitably. The Middle East and Africa, relatively flat, only a 2% up, but very strong business.
More and more we expand with franchised products into Western Europe. Therefore, a very significant Western Europe year-over-year 50% increase. Overall, Q3 year-over-year 11% up. Given the instability in the markets we trade, we believe this is a very satisfactory top-line increase. The gross profit margin, we expected some stabilization of this margin. We saw very significant, very high levels for the ASBIS history margins previous quarters. Now it seems that it's a little bit lower, but still very high. 7.99% is, it's a very high, we believe, gross profit margin. And we believe there is further possibility to develop it on one side, but on sustainability side, we believe that this margin is a sustainable margin. 7.5%-8% is a sustainable margin for the company.
We've seen higher margins closer and right after the war in Ukraine, but then we saw some rationalization, some flattening, some normalization of the gross profit margin. The SG&A costs, we made significant investments, as we discussed a lot of times, in human capital to develop new business. Therefore, SG&As have significantly increased also as a function of mostly gross profit rather than sales. We expect the necessary payout coming from sales and gross profit to excuse this significant increase. You know, these last few quarters was an investment time, the outcome of which was not expected from day one. This is what we see in front of us. We see an increase, but on the other side, sooner than later, sometime next year, we expect to see results coming out of this.
I repeat, Q3 was the highest profitability quarter in ASBIS's history. We achieved $22.2 million profit. Yes, with some one-offs, but we are very satisfied. Given the overall market situation, we are very satisfied with the results we have achieved. A net profit that year-over-year shows a 10% increase. Full income statement for Q3 year-over-year and the nine months. We touched the top line already for Q3, 11%, reaching $772 million. For the nine months, a 14% increase, reaching almost $2.2 billion dollar revenue. EBIT showed some slowdown by 5% for Q3, a +7% for the nine months.
I wanted to also note that the net financing cost is significantly increasing due to the base rates increasing in all the countries. Both the euro, the dollar, but also the local currencies we borrow at, became quite expensive. We see significant increases. Q3 shows a 38% historic high, net financing cost figures and very high, again, historically, the highest, base rates we pay in different currencies. Just a small estimate, we expect this to smooth down, stay flat, maybe another 25 basis points up, and then we flatten out. Analysts expect by end of Q2 to be the same. Then depending on the inflation rates, we expect this to start coming down and start seeing other things being equal, turnover and others being at the same levels, we expect to see a slowdown in the net financing costs for next year.
Historic high, that's the summary on financing cost that is negatively affecting our both Q3 and nine-month results. At the end of the day, as I said, with the one-offs, we managed to deliver a $22.2 with a net margin of almost 2.9%, which keeps the company, keeps its directors quite satisfied with these results. On the net working capital side, we have managed to produce a positive number from operating activities in Q3, though a small one, a little bit more than $3 million, but we are gradually closing the gap from the negative cash from operating activities, expecting to hit a positive number, generate a positive number for the full year 2023. On the CapEx, on the investing activities, the CapEx has lowered this number because we sold some fixed assets we didn't use.
Therefore, this is improving the outflow on investing activities. I think that characterizes our nine-month cash flow. Again, with the expectation that we should be able to deliver both a positive a generation of a positive number from operating activities with a much improved cash position at the year-end given the seasonality. The debt of the company is at we believe at reasonable levels as compared as a ratio to equity. If I were to include also factoring advances to this debt, we are sitting end of September with $121 million total debt. That represents a ratio of 0.4 to equity of the company. Very reasonable, we believe.
I wish I could say the same on the cost of it, but as you might have seen on the interim report, the weighted average cost of debt continued to go up. For the nine months, we calculate the weighted average cost of debt of 12.0%. If you recall, for the whole 2022, we had a weighted average cost of debt of 10.5%. The outlook of the remainder of the year, we are talking about the best quarter in the year. Also the case last year. We expect the same to happen this year. November is a determinant of a very strong Q4. We started well, both October and early November.
We believe we should be able to achieve a strong Q4 number, therefore being able to achieve the forecast we have given to the market. The new product introduction, mainly Apple, is expected to show numbers in Q4. Another reason why Q4 this year is expected, as usually expected to show good numbers, both top line, but most importantly, profitability numbers. Tracking the forecast we have given to the market. Starting with the revenue, we said to the market that we should be able to achieve sales between $3 billion and $3.2 billion. Now we are sitting at $2.2 billion almost. Therefore, we have achieved so far about 69% of the top-line forecast. On the bottom line, on net income, we have told the market that we expect a net profitability of $78 million-$82 million.
So far, we achieved $51 billion, rounding the numbers. That represents about 62% of the announced forecast to the market. We strongly believe, and we are confident that we should be able to achieve this forecast both on the top line, but most importantly on the bottom line for 2023. 2024 outlook looks very strong. We have more Apple products. The iPhone 15 is selling quite well. As I said earlier, I expect the impact of that to show in Q4. The big numbers are in Q4. We pay more emphasis on the own brand with higher margin. On the market side, we continue to focus with Apple and not only on the CIS market, especially the franchise with Apple markets of Central Asia.
We still develop Central and Eastern Europe and now more into Southern Europe. As we saw earlier, Slovakia has been very strong and we continue to push business through Slovakia. We have new opportunities to African markets with a lot of suppliers, some of which are expected to be announced in the near term, assuming we agree and we sign, some of which are already there. You know, big franchised products, vendors will give us a booster in terms of growth for next year. Sub-Saharan mainly countries, but also there is a chance to further develop Africa, North Africa markets.
That's why we established the hub in Johannesburg to be closer to the customer, shrink the throughput time of products to customer and provide better service to our customers as a means for further growth for next year. Our focus is still more and more into corporate clients, but we also address the retail channel, very important for us. Higher the margin. Yes, higher the inventories and the receivable days we have to grant to customers, but it pays off in terms of above average profitability. Some risks and opportunities. We're seeing stability in the markets where we trade given the war in Ukraine, but also a very recent in Israel. Inflation is at historic high levels, therefore the interest rates keep going up.
As I said earlier, hopefully we are close to reaching the peaks. Therefore, we see lower in the next year. We also see growing HR costs. On the opportunity side, we see some rebound in customer demand, though inflation is affecting disposable income of people. The private labels seem to have a very niche but profitable business with higher margins than third-party products. As I said earlier, we are seeing an opportunity to grow in new markets as a means to grow revenues, as a means to grow profits. We discussed about dividends. We discussed about the actual payment early July of the final dividend relating to 2022 results.
We also noted in the interim report a preliminary dividend to be paid early December for the 2023 results of $0.20 a share, lifting the total payment for the year to $0.45 . Historically, as you see on the chart, consecutively year after year, we kept paying a growing dividend payout starting with 2016. For the last seven years, we have been out there paying a significant part of our profits to shareholders as a dividend, and we aim to continue to do that. I think that summarizes Q3 and the nine-month results and business, and we welcome any questions you may have on these either now or right after you have absorbed better Q3 and the nine-month results. We are always there to address any questions you may have.
Do you expect any other one-off items which could affect your results in the fourth quarter?
The disposal of the second and last subsidiary in Moscow, we faced a lot of sensitivity over Russia. The second and last business we had in Russia was disposed of in October. That will depend on the balance sheet end of October. That's the agreement. This depending on the balance sheet to exist, we, it's expected to give some one-offs, and we close the chapter Russia, and we close the sensitivity, but that's in Q4. That we already mentioned in the interim report, Iago. It's already there. Even on the group structure showing the entities, we put a note to say that was disposed.
In post-balance sheet events, we also noted the disposal of the second and last subsidiary in Russia. This is expected to be one of the buildings we don't use. For example, we left Limassol, the old corporate offices, and we moved to a new high-tech 11,000 sq m, et cetera. The previous one was sold. We do the same in Middle East. As the business grows, we go to a new place. There is a chance we further sell. If we sell it in Q4, I don't expect any significant one-off there, of course. We don't want to stay on assets as investment properties. Yes. We use it for the business. If we don't use it for the business, the clear intention is to sell it. Yes.
Other than this, other than the historic high financial costs, I don't know if this is a one-off, seeing the trend of keep increasing, now somewhat flattening, but obviously it badly affects Q3 and nine months and full year 2023. Yes. Historic high. Yes. We have here 40% increase in financing cost. We used to have, you recall, $22 million-$23 million net financing cost. We are hitting $34 million-$35 million this year. You know, this extra, you know, $15 million, $13 million-$14 million is profitability amounts. If we start next year seeing the slowdown, which we expect starting end of Q2, then we are talking about significant savings. Yes. Will it happen? Depending on the inflation rates coming down, we expect if business will not stay the same, but if business is the same, then we expect significant savings next year. Yes. These are, to me, one-offs. Yes. Both positive and negative.
What is the reason for so big inventory? Do you have also this year any special contracts with Apple?
There are various reasons why the inventory is high. One of the reasons, I think I said indirectly earlier, is addressing the retail customer requires more inventory. I also said it when I mentioned the regional hubs, distribution centers. When you open one in Georgia and one in South Africa, and you start loading with product to serve the customer better, you expect higher inventories. These are two main reasons, but also growth of the top line requires higher inventory. We are hitting +$3 billion sales this year. Representing a double-digit increase year-over-year. That requires extra inventories. Now, is the $480 million we show a representative number? Do we expect the same number for end of December? No.
We expect lower number, but it will not go to, if I look two years back, $330 million-$350 million range. It will be higher. I don't expect anything more than $450 million-$460 million year-end. Maybe that's already too much, depending on how good you perform sales in Q4. Yes. But yes, the inventory is at higher levels than it used to be. Yes.
What do you think about cash flow from the end of the year?
I believe we should be able to generate a positive cash from operating activities with much improved cash position at year-end. We already closed the gap significantly in Q2 when it comes to cash from operating activities. Another small closing of the gap in Q3. We are sitting today at -$37 negative cash from operating, and given the seasonality and the trends characterizing Q4, I expect to being able to generate a positive number, not just for Q4, but for the whole year, turning the whole year positive on operations with a cash position much higher than what we see end of September. That's what we expect to see on the cash flow. With lower the cash from going out of the company from investing activity because of the disposal of certain fixed assets, we don't use.
You haven't mentioned anything about possible change in forecast this year.
Because we don't have any clue that gives us the right to come out to the market and say we're going to revise the forecast. We achieved a significant part of the net profitability. If Q4 behaves like Q4, we should be able to achieve the forecast. I said exactly the opposite, I think. We are confident in being able to achieve Q4 and the whole 2023 forecast. Yes.
You believe in achieving forecast on adjusted basis or on a reported basis? 'Cause the first quarter was increased by a significant one-off item, so?
Yes. When we announced the forecast, we didn't make the distinction. If you start making the distinction on a quarterly basis now, I don't know if you will confuse more than clarifying more to investors. The $78-$82 is a bottom line forecast. I repeat, we should be able to achieve it. Now, I don't know the figures on any other one-offs for Q4. I don't have a figure in front of me. One by one, we have to see how the disposal leaves us on the balance sheet of end of October, and then we see. Any more questions?
Can you tell us more about your sales in Western Europe ?
Yes.
Just very big markets?
Yes.
You said last time that the big tech companies, they don't want to cooperate with smaller distribution. What can we expect for 2022 and 2024 in the Western Europe countries? How you see it?
We are building teams in Western Europe because we are franchised with a lot of suppliers to sell throughout Europe. Though we are not fully infrastructured with subsidiaries in Netherlands, in the U.K., in Germany, et cetera, we have sales in these countries. You know, putting more infrastructure, more sales people on the ground helps us grow quickly. With products we have already, we are authorized to sell products there. It's nothing. No new franchise to us. It's existing franchise we make a use of now. Yeah?
Considering how big these markets are, can you expect that you will grow there perhaps more quicker?
Yeah.
Than in the other regions?
We don't want to go and place another 20 entities in Western Europe with another, I don't know, 300, 400 people there. We tried the sales way, the sales manager's way there. It's improving sales, and it's leaving good profit. It's not just sales, it's profitability. We saw that this way works better for us. Now, if this business proves to be very significant business, a very significant opportunity for more business, we will not hesitate. Day one, we don't want to build another few subsidiaries there and a lot of staff there. We don't wanna do that. We have similar examples happening elsewhere, like in Dubai, for example. We are selling to Saudi Arabia. We used to have a subsidiary there, it didn't pay off. We couldn't cover the cost. Though we have good sales and good customers. We are selling through the Dubai establishment. Yes. Not necessarily we need to build teams there and companies and expenses.
Regarding cash flow, you mentioned that?
Yes.
It should be positive for a whole year?
This is what we expect, yes.
What about working capital change throughout the whole year? Should it be positive, negative?
We expect it.
Because it already increased very much in 2022, and there was some expectation that it should end up normalizing during 2023, and we still don't see it after three quarters. Do you believe it is possible that it will decrease throughout the whole year, or?
It will decrease. It will decrease in Q4, given seasonality, given higher sales. Given higher sales means you're clearing more of the inventory. If the inventory comes down to lower than 450, obviously will have a positive impact on the working capital. Yes. Addressing the retail customer, earlier I said, you know, it's creating more burden on DSO, and on the working capital, obviously. Yeah. It took us longer to dispose of the stocks we bought end of last year, and that had a negative impact on the working capital for the six months and for the nine months. I think Q4 will be a determinant of improved working capital, and we expect to see better numbers. Now, internally comparing Q3, working capital days and cash-to-cash cycles, is much improving from Q2. Yes.
Okay, inventories didn't come down significantly, but $18 million-$19 million here, receivables are getting better, you know. It's improving. It's also seasonal. Yes. You cannot extract the picture for the year by just looking at H1 or the nine months. The best working capital picture is Q4, historically. Yeah. There are improvements, Grzegorz. There are improvements.
Okay. The last question regarding investments costs. As I saw, throughout two years, the employment increased 30%. The SG&A costs, when do you believe that these investments should start to paying out?
We told the market that we expect the second half of this year to start giving significant numbers. We have some difficulties in delivering strong sales and gross profit numbers, therefore the investments stayed the same. We didn't release staff, and we expect we should be able to, given the backlog we see, should be able to deliver good benefit out of these investments in 2024. The first triggering point, of course, will be Q4. We have to see what they can finally deliver in the best quarter of the year. Yes, we expected the investment to come first and the outcome to come not the next day, but after a couple of quarters. We expect to see that starting this year, starting Q4. The next turning point is the budgets.
You know, we have to decide on the budgets depending on what they have managed to deliver up to and including Q4. What do we do for next year? Do we stay with the same investment? Are we seeing the numbers coming, and we are strongly believing into getting this benefit finally in 2024, or not? We expect the same. We expect to see the benefit because we made significant investments on new businesses.
How much of this additional inventories from Apple from the fourth quarter is still on your balance sheet?
Very small. I don't recall the figure, but most of it was sold out by end of Q3, like the target was, with very small remaining at APR stores. That was significantly disposed. We sold that.
It should be cleared in the fourth quarter?
Yes. Yes. Cleared completely because the bulk of it was cleared out by end of Q3. Yes. That's also a burden to Grzegorz's question earlier on the working capital. That negatively affected the working capital utilization for the nine months. Yes. Clearing of that will bring improvements to the working capital.
All right. Thank you for your questions. Thank you for your attendance today and looking forward to having a light lunch with you guys. Any questions on the side are most welcome as always. Thank you.