Good afternoon, everyone, and welcome to BayWa's virtual analyst conference on the results of the fiscal year 2023. All documents relating to this conference were sent out this morning. After the record year 2022, which benefited from an extraordinary situation on the commodity markets, the situation changed significantly in 2023 to the disadvantage of BayWa. Mr. Pöllinger, CEO, and Mr. Helber, CFO, will explain the development of the fiscal year 2023 and present the measures taken to return to profitability. As usual, you will have the opportunity to ask your question after the presentation. Please turn off your microphones until the Q&A session starts. And with that, I hand over to Mr. Pöllinger.
Thank you very much, Josko. And a very warm welcome from my side, ladies and gentlemen, to our conference. Unfortunately, we have to show you a loss in 2023, and this is actually the first time ever in the more than 100 years-lasting history of BayWa that we have to do this. This is not an easy task for us, but it underlines the necessity of our new strategy 2030, which implies that profitability goes above all our doings. Let me start with the slides. First of all, I have to, apparently, it's not now it's working. Will be the first time ever. Yes. Here we go. What are we doing? We are looking very closely on the whole portfolio of our company. In the last 10 to 15 years, BayWa grew internationally and very heavily.
We have to admit that the fact that interest costs have risen over the last year, we do see a loss. The profitability, so the EBIT, is quite in range. We were in November, we gave a guideline of EUR 320 million-EUR 370 million in EBIT, and we reached EUR 304 million. Due to the fact that we didn't achieve to sell Solar Trade in 2023, which we are willing to do in 2024, we do see a loss for the whole group. But - and this is the most important thing I want to underline here - there are a lot of factors concerning 2023, which we won't see in 2024 anymore. It's about EUR 100 million; the EBIT is supposed to be better than it is in real figures. So we won't see this impact in 2023.
So I'm absolutely convinced that we're going to be in the profit zone in 2024 again and even be able to pay dividends in 2024. Let me guide you on the next slide. You see the revenues. The EBIT has dropped to EUR 304, and due to the fact of the rising interest costs, we now see an earnings per share of -EUR 2.84 million. I'm sorry. Putting the EBIT into the perspective of the comparison of the last year, you see it's the second-best EBIT in history of BayWa, but as the profitability is not there where it should be, it won't lead to a profit after all. And as I mentioned before, while I am confident that we will see a better result in 2024, I would love to outline you the reasons which we had to face in 2023.
First of all, we did see the cyclone in the North Island of our harvest area of apple in Hawke's Bay in New Zealand, so EUR 35 million losses we did see over there. Then we've got the write-downs of solar modules in the last two months of the last year of EUR 34 million. You probably all have seen the drop of solar module prices in the last year. And then, of course, the anniversary costs. BayWa turned 100 years in 2023. We won't see this figure for the next 100 years, supposedly. Then we did start looking at our portfolio, and we did start to sell non-profitable companies. And we did start with FarmFacts. We stopped the bleeding. It was a loss of about EUR 8 million EBIT every year. This cost us EUR 10 million. We did sell it to AGCO.
It's a good company, but it's a company that should be in the research and development department of a manufacturer, not of a trading house. These were the one-offs we saw in 2023, and they are, if you put all them together, going to sum up to over EUR 100 million. And then, of course, the downside in building materials. We will see this in 2024 and 2025. We are totally aware of this. And the other thing is the downside in the Eastern Europe grain trading business. We won't see this again. I'm pretty sure about that. And of course, if we try to show you a normalized EBIT, we have to show you the upsides as well. So the agricultural equipment business ran perfectly well in 2023.
And the Cefetra Group, one of our future pillars for growth, one of our pillars we're going to invest in into the next years, they did very well in 2023, and we are totally sure that they will do very good in 2024 as well. So it's a normalized EBIT of EUR 435 million, which shows that the operational strength of the company is still in line. And the next slide is very important as well because you will see that the earnings before tax is due to the fact of the write-offs and all the hurt I've just mentioned to you is EUR 37.7 million, which brings the company into the 90s losses is due to tax effect, non-cash tax effect, which my dear colleague Andreas will elaborate later on. Let me just go through our segments. First of all, I already mentioned it.
We see a dramatic price drop for solar modules, which is on the one hand pretty good for our business in the engineering and building the solar parks. It's not good for the trading. We are one of the largest solar panel traders worldwide, and apparently the stocks were full, and we had to take a write-off of EUR 30 million in 2023. But now we are sure, and our ERP system shows it to us, that our stock is now in line with the price. On the other side, you're going to see the global investment in renewable energy in 2023. It's worldwide, and it's a rising market. We are confident that this will go on. And let me give you an idea of the renewable energy segment. We did see an EBIT of about EUR 193.5 million.
We are supposed to see an EBIT in this segment in 2024 above EUR 200 million next year. The reason for that is that we've got a pipeline of over 1 GW we will sell in the U.S. in 2024 and the expansion of our IPP portfolio to 1.1 GW. As well as I just mentioned, the solar modules prices have stabilized, and we are convinced that this market will pick up as well. Next slide. Our conventional business, we are very happy with our wood pellets and the heating oil. It's a business running for years and years and years. There's not much cash involved into that business, and we are seeing a normalized year in 2023 already. We have seen a normalized year in 2023 already. If you compare it to 2021, please be aware. Never compare to the energy-related prices in 2022.
The outlook is it's a stabilized, good business, and we will run it because it's a nice cash flow business. Let us just have a look on the agricultural products, and there you see the development of the agro-commodity price trend. Be aware that as a trader, we love volatile markets because these are the markets where we earn our money. This is the reason in 2022 you have seen these outstanding figures in the agri-trade business. Next slide. This is, as I mentioned before, our Cefetra Group. We are very happy with this company. And as I mentioned already, it's one of our growth areas there. EUR 46.6 million EBIT, and the outlook is stable development, especially into the specialty business.
If you have any time, please try to find our company Royal Ingredients on the internet, and you will get an idea or glance of what kind of products, starches, sweeteners, proteins they are selling. It's a very interesting business, and I'm very pleased how our guys in Rotterdam are performing in these markets. Next slide, you see the fertilizer business. We have a very short positioning in our stock because the main focus in 2024 is getting the money back, getting the money back into the whole group. We will see in the next 15 months that we will retrack over EUR 1 billion into the company. There is a 10-point plan lying behind this, and one of the plans is, of course, that we don't invest too much money into the stocks of our fertilizer. And the team around my colleague, Dr.
Wienert, are doing an extremely wild job. So we are able to serve the farmers, but not holding the stocks higher than necessary. You can see the figures are quite good. 2021 was not an easy year, but 2023 is getting back on track in EBIT, especially the business of our grain trading is very well, and we are earning money there. Next slide is our fantastic business of as well, the business of my colleague, Dr. Marlen Wienert, the agricultural equipment business. As you probably know, we are one of the largest traders for agricultural equipment, and we do see an increase in this business area in 2023 of more than 20% in EBIT. And we will see this, hopefully, in the next years as well because the southern German farmers, the Netherlands farmers, are investing in new machinery, investing in high-tech.
They are looking at their own profitability more than ever, and that means they do need the latest products in their stock. Next thing is, as I mentioned before, probably the cyclone in New Zealand. New Zealand is supposed, as you can see on the next slide, with EUR 21 million to provide EUR 21 million. This is even that is not the figure we'd love to say. It's above EUR 40 million as we've seen it in 2021, unfortunately.
And due to the fact that the insurance company did not manage to pay in 2023, this is one of the reasons we did miss the guidance. We are expecting over EUR 15 million in cashback from the insurance company for 2024, and this should be additional to the EUR 40 million we are expecting of Global Produce anyway. So this is the figures for 2024. We do see a silver lining on the horizon.
This is totally different, unfortunately, in the building material sector. I do believe that building material is one of our domestic growth markets because we will need housing, we will need flats, and we will need to modernize our buildings due to the fact that we are losing 40% of our energy out of the buildings. So there is a need in Germany for building materials. And as we achieve to broaden our portfolio in the building materials, we are now with our project company, are developing flats, and this gives us the possibility, even though we know that in 2024 is going to be a hard year, we are expecting a good and even better figure in EBIT as we've seen in 2023.
The innovation and digitalization, as I mentioned before, that doesn't mean this is probably the last time you see this segment because there was the bundling of our digitalization businesses like FarmFacts, which we did sell, stop the bleeding. As I'd love to say, with EUR -10 million, this does not mean that BayWa is not an innovative company anymore, but we are providing all these innovation and digitalization businesses within the segment, within the group, within the company. And this is what I have to say about the operational business. Bear in mind, we are following our new strategy. It's about profitability. It's about looking very closely on our portfolio. It's about deleveraging, deleveraging, and the main goal is to get back to an equity ratio of 20% as soon as possible, at least over the next years.
This is underlined by a cost-cutting program in every single business unit of our group. Even in the RE business, we've started this together with McKinsey, and they've just achieved the first EUR 10 million reduction in overhead costs, same in our headquarters here in Munich. So I am absolutely sure that we are on the right track here. Now I'd love to hand over to my dear colleague, Andreas. Yeah.
Thank you, Marcus. Also good afternoon from my side. I'd like to continue with some views on the financials, some comments on the financials. As usual, I start with the other activities. This is a bunch of all the costs not allocated to the segments, to the business units. You see it drop down from EUR 100 to EUR 63 year-over-year.
This year's or last year's 2023 result was induced by some higher income from subsidiaries, some bank dividends coming in from our Austrian clients, but also a good performance of the RWA, Austria Juice business that flew in here, some higher unexpected income from sale of real estate. You see it mentioned here as the last year or the previous year was burdened by some write-offs on the inventory side, on the real estate side with some EUR 14 million that was included in the very high record result 2022. On the summary and the next three slides summarize the business units or the segments Marcus was elaborating on into the business units. The first one is the energy business unit consisting of the renewable energy and the classical energy business.
And you see it here, the numbers as they are with some pre-tax profit for the business unit of some roughly EUR 74 to 73 million in total. But this is the part where the tax issue came up at the very late stage during the audit course or the course of the closing of the financial statements. I will come back on no, I do it here right now. The tax issue was mostly only on the deferred tax base within the RE business coming from abroad, mostly from the U.S. business where due to the high interest cost, the interest range that cut it off by some issues with tax on the legal jurisdictions of the U.S., but also some corrections from prior years of tax entrance that has to be made. It was mostly all on the deferred tax assets.
Therefore, it's not cash-driven or will not have cash impact, but nevertheless, it impacted the overall year result and also our equity position. Therefore, it's not acceptable, but it happened, and we had to go through it, and it took us some EUR 55 million off the pre-tax profit here in the renewable energy segment or in the renewable energy segment business as well. Agriculture summarized the four segments, the two very successful ones, the agricultural equipment, you saw that, and also Cefetra Group, but also the better-than-normal year running agribusiness, the domestic business. If you compare it, of course, to 2022, which is the record high ever, but if you compare it to the more normalized year 2021, it's mostly doubled income in here, and that was also included in the business unit agriculture.
But it also includes the, yeah, impacted by the cyclone business in New Zealand bringing up a minus EUR 15 million contribution into the agri segment. Finally, the building materials, and this is the only segment that runs into the business unit, building materials, and there you see the pre-tax loss already mentioned by some EUR 30 million. And compared to the year before with also a very good record, high on the EBIT-wise numbers followed by 2020 or following 2021, that was heavily induced by the economic impact on the German, on the European building sector. Summing this up to the overall income statement and some comment on this, you see the numbers. And as we pointed out, operational, we are not that unhappy with the performance of the year. Marcus showed that this is EBIT-wise the second best in history that we had.
Nevertheless, we missed the corridor of EUR 2,320 TO EUR 2,370, which we still indicated in the November conference, and we were quite confident that we could take the insurance claim in New Zealand in with some more or even 15 to whatever million EUR on euro base. They did not make it, the insurance company, to finalize the work on the claims. So we had to keep it out or to leave it out, and this will be now postponed only in 2024. We expect still the claim to come in. And the next impact was, as Marcus already mentioned, the write-offs of the solar trade modules close to the end of the year. That impacted also the final quarter. And without these two effects, we had been in our range that we dedicated or indicated in the November conference. What we did not match was the interest burn.
Also throughout the year, the interest planning was some EUR 240 million, EUR 236 million, and it came up with EUR 340 million. So that was a strong mismatch on the interest costs. The reasons for that was several ones. First, of course, I guess the planning was too low since it was made already in November 2022. Since then, we have seen further interest step upwards until the mid of 2023, probably not indicated or anticipated in that strange or over the years to come. The second thing was that probably our working capital management was not good enough, not good enough on two areas. And specifically, I think the inventory levels, the working capital level, but particularly the inventory level on the agricultural equipment were too high. They were even higher than the year before.
It's something that runs through the whole industry, but it was a pity for us that we had to keep all the machinery in our locations. And that was one of the reasons and is one of the issues. We are strongly working on to reduce it down to by EUR 150 million, even maybe more, but at least EUR 150 million by the mid of 2024. So we are ongoing selling these machineries off.
Mostly of them are already sold, but they are still with us, and they are now running out of our locations and of our inventory and, of course, of our debt position. Second part was another area within the renewable energy business, the solar trade business again. They also came into 2023 with very high inventory levels coming out of the COVID phase 2022 and 2021 where they benefited from the high inventory levels they carried on.
But that was, of course, with rising interest costs, a burden now coming into 2023. And finally, we anticipated or we thought that we would be stronger in the sale of renewable energy projects. If you look on the numbers Marcus just showed, you see that we already still sold 400 megawatts, I guess, but compared to the year before, it was just half of the numbers we sold in 2022. And the reason for it, that in the second half of the year, the investors stepped back a little bit. They were more reluctant and postponed sales or purchases of the project, which is now picking up again, but that was an issue in 2023, the second half of the year.
Nevertheless, the guys in the RE business made their EBIT, but they made it, to be honest, by the sale of project rights instead of inventory carrying or cost-carrying project that we still have on board. And this was probably the third issue that we met such a mismatch on the interest cost, bringing it up to some EUR 340 million in total. That brought the very successful operational performance of EUR 300 million down to the EUR -37 million pre-tax profit.
And then with the tax impact, a one-time tax impact that I already mentioned, it made it up to what it is, the loss of EUR 93.4 million for the full year 2023. Looking on the balance sheet, we reduced the total asset number by some 3.5%, but that was not enough, and it is not enough. And this will be the focus of 2024 and the years to come.
Marcus indicated that in the different areas where we are working on, but this is one of the main focuses, getting out of the business parts, getting out of the inventory, getting out of the assets, reducing the total asset number. Growth on the asset line has nothing to say with being successful, improving the equity ratio, which came down to 13.7. It's not the lowest number ever, but it's completely unsatisfactory. And as Marcus mentioned, we are on track to back to 20% until the year 2026. This is what our underlying plans are indicating at what we showed also to some of you. This is the pace we are working on. And that comes along, of course, with reduction on the debt side. You see the long- and the short-term assets merely unchanged, the change between long to short-term.
This comes along with our green bond that we reclassified into short-term debt now. This is the area where we have to work on reducing the inventory levels, setting free cash, using this cash by reducing the debt position. This morning in the press conference, I've been asked, "What is your target for 2024?" 2024 only. This is roughly an amount of EUR 500 million, which should come out of the different inventory reducing measures I mentioned, I talked about, but also on sale of projects from the RE business and ongoing inventory levels in other areas. So this is the target for 2024. A lot of projects are also reaching out into 2025.
If I consider the sale of one of our huge projects in the U.S. and the RE business, it's the very famous project, Strauss, huge wind park, wind farm in the Californian area, a very interesting asset, which is to be, yeah, should I say, updated or improved by a battery project as well. And after that, we will go to the market with that. That has a huge impact on the 2025 number as well as the planned sale of the solar trade business, which we are picking up again in 2024, hopefully closing it early 2025. This is the timeline. This is the roadmap that we are working on. Cash flow, looking on the operating cash flow, shows a different picture from what it was in the past, mainly coming out of we did not miss it in all areas.
We made some efforts also in the commodity business, as you know, coming out of this 2022 business, reducing inventories there, leading to a positive cash flow from the operating activities. Investing activities, cash flow mostly remained to or belong to the IPP and the renewable energy business, shifting from inventory levels into the long-term assets-based ones, but also some investment activities that we made in New Zealand. We opened up a huge packhouse in the Hawke's Bay area, not affected by, not affected at all by the cyclone last year and being probably one of the assets of the future for the recovery of the New Zealand business in 2024 and beyond. Yeah, financing cash flow a little bit minus. And that brings me to another number, which we have to work on, which goes along with the other ones that I mentioned. The liability is too high.
Liabilities have been slightly increased year-over-year, but that's only driven by non-recourse finance on the renewable energy business. The readily marketable inventories, you remember the last year's number, it was at EUR 1.2 billion. The year before, it came down to roughly EUR 1 billion this year. The adjusted net debt is too high. The EBITDA is too low, and that leads us to a leverage of 6.2 for 2023. The protection that we have with the measures that we are working on brings us back to at least, I hope, in 2024 already in a range of 4.6, which is also a bit too high. But after that, to 2025, it should be overall in a range of 3-2.93, maybe in 2026 by picking up a little bit again on asset-based on the renewable energy business. It could go back to somewhat above 3, maybe 3.2.
But we have to work on this. The 6.1 is definitely not the one that we want to see for the sustainable times. Also the picture on the economic profit. If you look on the numbers last year and the year before, it was all fine. We have three pain points within this slide or within this picture. The first pain point is the operating profit. It's too low. The second one is the interest of capital. It's too high. The third pain point are mostly the capital costs. You see how they had risen from year on year. If you compare to 2021 at least, you see an increase in this capital costs reflecting the higher cost of capital for the debt position. That is reflected in here.
The outcome is that at least, yeah, mostly only two or three at least own their cost of capital and delivering an economic profit. And where we have to work on is the invested capital in the renewable energy business, but also on the agri trade. This includes the agricultural equipment inventories in here. And you see it on the other ones. We have to work on that, improving the operating profit, but also reducing the invested capital. And that should be it. I think there are a lot of questions coming out of it. But first of that, before we close it, let us look in what we expect, Marcus, also number-wise from 2024. Absolutely.
Thank you so much. This is the first slide of the strategy 2013. And be assured, this is not a PowerPoint strategy.
This is a strategy our head of strategy, Jakob Bürg , created with his team and the whole executive board. They traveled the world, and they talked to each and every manager within the BayWa Group. It's a very detailed, very profound, very thoroughly, yeah, created strategy, which will help us to do all these points Andreas just mentioned, getting the group into a higher profitability range. It's based on three core elements, the mastering markets. As you know, we are operating within the basic human needs. This is the kind of business we are willing to stay in. We have to improve our operating model by excellence in each and every business unit nationally and abroad. First of all, of course, realizing our value creation for impact.
That means we look at, I mentioned before, very thoroughly on our portfolio and will judge which company has to improve, which company has to leave, and which company we will grow in. The main pillars for growth, as I mentioned before, are the international grain trading and specialty. The other main area is the renewable energy. But even there, within our renewable energy business, there is still work to do. They are not performing as good as they should be. There's a lot of money involved within this business, and we have to improve this business within the next two years to get the highest possible profitability out of this business. Let me just show you the 10-point plan, give you a rough idea where we are heading. First, the solar trade, we did increase the profitability already by decreasing the working capital of EUR 150 million.
We decreased our working capital within the BayWa equity, as we just mentioned, agri equipment area. We see a performance in the capital employed with Strauss and Fambridge within the next two years. Then, of course, unfortunately, no price tag on this one. The fourth is the sale of solar trade business. And we do see quite a big improvement in the market environment in the second half of 2024, though we will be able to start this process again. And then, as I mentioned before, the sale of selected overarching other portfolio within the BayWa Group, the turnaround in the agri inputs, the performance improvement at RWA, it's EUR 20 million in EBIT, the performance improvement of global produce.
It's actually the eighth point is not as detailed as it should be because I think within this performance improvement, there are the EUR 15 million of the insurance claim integrated in that one, which has actually nothing to do with performance. But maybe we have to talk to the management again. That brings me on to our next page and gives you a rough idea of the decrease in interest costs. And I don't think that we have seen interest rate cuts integrated in these figures, Andreas. This is just the decrease of the working capital. And therefore, the earnings per share, the earnings before tax should be in 2024 in the range of EUR 65 to 75, hopefully even higher, which puts us, which will put us in the position to pay dividends again. And this is the main focus of this management. It's not about turnover.
It's not about big figures. It's not about making business all over the world. It's about a stable dividend for our stakeholders. Thank you so much. And then I'm going to hand back to you, Josko, for the questions. So thank you very much. That was a great insight into the development of the upcoming year, 2024.