The consolidated net revenues of the Van Leeuwen Pipe and Tube Group were € 1,621 million and, with a minor decline compared to the previous year, stayed relatively stable (2022: € 1,672 million). In comparison to 2022, market demand decreased, especially in the second half of the year. This resulted in lower distribution volumes and significantly lower prices, which in turn resulted in lower revenue in 2023. Due to an increase in project volumes, the sales volume stayed more or less the same as last year.
The operating result decreased from € 104 million in 2022 to € 60 million in 2023. This was due to a reduction in volume combined with the higher cost of end-products. As a result, the margin percentage decreased to 19.3% (2022: 21.6%), and the total gross margin decreased from € 361 million in 2022 to € 313 million in 2023.
Total operating expenses decreased by € 7.7 million to € 1,560 million in 2023 (2022: 1,568 million). Wages and salaries decreased by 7% through a combination of salary increases on the one hand and lower profit sharing and a decrease in the number of FTEs on the other hand. The increase in other operating expenses were primarily due to higher selling expenses, the cost of fixed assets and IT-related costs.
Financial expenses increased by € 3.9 million to € 7.2 million (2021: € 3.3 million) due to higher interest rates. Financing requirements decreased by € 6.0 million, which only slightly offset the increase in interest rates. The effective tax rate increased to 19.1% (2022: 14.4%) and, in comparison to last year, was positively affected by the mix of country tax rates in the result's composition for 2023. Another positive effect was the use and recognition in the balance sheet of the loss carried forward, which previously had not been fully recognized due to the uncertainty of available profits. The result from participating interests amounted to € 0.1 million (2022: € 2.0 million) and relates to our investment in Polarputki, a non-controlled 50% joint venture in Finland.
The lower gross margin on sales produced a net result of € 43 million in 2023 (2022: € 88 million). This result includes a release of negative goodwill in the amount of € 6.7 million (2022: € 7.0 million). Of this amount € 3.8 million (2022: € 2.7 million) was related to the pro-rated amortization of negative goodwill and € 2.9 million (2022: € 3.3 million) was related to integration costs.
Lower prices and reduced inventory levels have mainly contributed to a decrease in working capital in 2023, which improved by € 19 million. Another minor positive effect was due to a decrease in trade receivables (€ 4 million lower). By contrast, there was a greater decrease in accounts payable (€ 35 million lower), which had a negative impact. This decrease was due to lower procurement activities in the last quarter of the year, combined with lower procurement prices.
The operating cash flow was positive, thanks to a positive operating result and the slightly improved operating working capital. The cash outflow from investing activities was € 20 million (2022: € 30 million). The total cash flow was € 4 million negative, as a result of which the total cash flow decreased from € 14 million (December 31, 2022) to € 9 million (December 31, 2023). The balance of cash and borrowings improved from a net debt position of € 71 million negative in 2022 to a net debt position of € 69 million in 2023. The liquidity position remains good, and the current ratio at year-end was 2.0 (2022: 1,9). Solvency improved considerably to 46.8% (2022: 42.9%).
The Van Leeuwen Pipe and Tube Group’s cash position and bank facilities are sufficient to meet financing requirements.
