Day, ladies and gentlemen, and welcome to the BayWa analyst Second Quarter 2021 Conference Call. Today's conference is being recorded. At
size of the first half year twenty twenty one of fiber as AG. As you probably have recognized, we have disclosed our group EBIT this figure roughly 2 weeks ago. And as a consequence of this good result, we have also raised our Today, Professor Lutz, CEO and Andreas Helder, CFO, will provide you a deeper insight Let me finish my intro with my With the usual remark that all relevant documents have been sent out this morning. Otherwise, you can download it. And at the end of the presentation, We will be happy to take your questions.
And I hand over now to Professor Lutz.
Good morning, everyone on the phone. Welcome to our news What is it? It's the analyst conference, sorry, news conference is later. Analyst conference for the first half year, as You have acknowledged hopefully already is that we have excellent record figures for the 1st 6 months. It's the best half year report we ever provided to the capital market and to our investors and stakeholders.
Nevertheless, a fundamental remark from my side, this is not possible, unfortunately, to make a calculation on the basis of 140x2 Plus XYZ means a much, much higher result or more than double than 2020. And so far, It's important for you to understand what are the reasons for this excellent performance. And we start with the overall picture. I just call The page and if I turn the page and tell you the figure where I am, so you can follow me hopefully. As you see, we have a revenue increase of 13%.
What is the reason for that? It's volume driven In some parts, but also price driven regarding the commodity prices, for instance, You will see that later on because as always, RE is one of the key contributor to this excellent performance and Building Materials as well Due to the building boom, which we are faced with here in Central Europe and Even agriculture has higher revenue. Bottom line, we increased the EBIT from 53.8 the 244.6. The reason for that is especially that we sold 1 gigawatt That's the 1 140 Megawatt Projects from Baivarae. In the agriculture sector, Domestic and International Agri Trade benefits from the price increase over the last month.
So I wouldn't speak about the boom Of a boom situation, which we have in the commodity business, but the price development was very pleasant for us. And the building materials benefits from the construction activity, our joint ventures, which we have with Constructors and we have a much higher level than in the past. As you know, we are moving and transforming this company to a more and more project and solution oriented business model and the building material is part of that. And finally, of course, the coronavirus vaccination project, where we were one of the 10 the company's in Bavaria, especially but also in Germany and several other countries where we So I turn to Page 5. You see here the comparison of Q2 2021 On a multiyear comparison, I turn to Page 6, and here you see the overall group result is 146.
So the normal one is 50 something, yes? And we saw already in the first half year a negative situation, a loss situation. And so far, please don't expect in the future that we increase year by year our half year result in this SEK 144,000,000 is Renewable Energy included, last year, for instance, we had still a loss situation and this year, it's positive. If you turn to Page The overall market situation in renewable energy on the left side of this page, you see We have an increase of $3,100,000 expected global investments in renewable energy in 2021 from $121,000,000,000 to $125,000,000 more or less. Interesting is that we have more or less a flat Development in the Wind Onshore Energy Business.
And this has to do with the more and more Also for us very important, repowering projects, that's one thing. The other thing is China, we do not have really an overview What China is going to do, and as you know, the new 5 years plan, China decided the government decided to Invest really multi billions in sustainability projects. And this means, of course, especially in the renewable energy Sector increasing, that's very important for us. The market expectation for the Solana the facilities, and we are very, very well positioned in this business, and you will see that a little bit later. On the right side, Last year, we had a record high in the conventional energy sector, especially due to the high demand And the heating oil now, we have a little let me say, the level of performance is a little bit lower As we expected it, but better as we feel it, to be honest.
And this has to do with the increased Brent crude oil price, of course. And on the other side, due to the high stockpiling in the previous year, so the customers' demand Is not as high as last year, which is a quite normal development. Coming back to that later. So I turn to Page 9. Here, you'll see the Renewable Energy business increase in the revenue of SEK 1,300,000,000 as As long as if you are following Baeva and Baeva AE and my comments on all these developments over the last years, it's always the same.
Key aspect is the performance bottom line last year negative, this year EUR 50,000,000. So this could be Also different for the first half year in 2021. Due to the fact that we sold in Sweden, in Germany, in France and even in Japan, Solar or wind facilities, we had this great performance in the first half year. And interesting enough, Also, our trading business with PV components has a plus of 57% and inverters the plus of around about 38%. So the trading business is really significant also for this performance in the 1st 6 months.
By the way, we finalized an acquisition. We took over the German project developer Northwind with 60 wind projects, so around about 700 megawatts. And In France, the French in all SRS with a project pipeline of 600 Megawatt, you know that we are always looking for transactions, and it's not important how many people and so forth Because we are fighting for people, that's clear. But bottom line, the most important thing is to fulfill our pipeline, our project pipeline with Wind and Solar Opportunities for the Future. So in the 1st 6 months, we increased our overall pipeline of Around about 1 gigawatt.
And the overall pipeline, Andreas, is, I think, 15 gigawatt. Meanwhile, The last conference, if you remember, we had roundabout 13, 12 to 13 gigawatts. Now we have 15 gigawatts in the pipeline. This means over the next years, we know exactly what's going to happen in this business. Turn to Page 10.
The conventional energy Revenue is slightly lower, 2.5% as last year. And as consequence, and I explained that already, €6,500,000 the EBIT, and this has to do with the volume downturn in revenues and earnings due to the Heating oil situation in the market. Positive remark, the wood pellets has an increase of 37 And the lubricants are back on track. If you remember last year, we had a minus 8% now plus 13.2% on a year to year Basis in comparison. That's, I think, extremely important.
And we speed up with Baeva Mobility Solutions Company, we opened 2 new LNG fuel stations in Germany. We have now 7. And we are also moving the LNG business more and more to the green LNG Business in Germany, of course, the contribution bottom line is not Really significant at this point in time. We come to the agriculture sector. Turn to Page 12, please.
So the market development In the commodity, you see here the Matif wheat and the Chicago Board of Trade corn That we saw over the last with the last months from the tendency, an increase of prices. We had in May a higher volatility, which is positive for our Cephitra business. So this year, Yes. Agri commodity is much more in favor for our business. On the right side, you see the global grain balance with our rice as always.
Interesting is that the stock has been reduced in the last period 2020 to 2021 Around about minus 35,000,000 tonnes, this is a positive fundamentally that we see more increase of prices in principle, but this can be changed within A few hours as you know. And for 2021, 2022, the expectation is 9,000,000 increase 9,000,000 ton increase of the storage. Here, I would make a big question mark due So the weather situation is not only here in Central Europe where we have this rainy weather conditions or even in other Countries and areas, either we have rain or we don't have enough water supply. So the climate change and the climate Circumstances are more and more affecting our business. So we turn to Page 13.
The import resources Was last year a little bit under pressure as you know. Now we have higher energy costs and the producer prices European Union ban to import potash from potash salt from Belarus Is an additional price driver. And finally, bottom line, the business has been developed for us very positively. I'm coming back to that in a moment. Interesting enough, again, the agriculture equipment, you see here an increase for the new tractor registrations in Germany, which is an interesting indicator For our business development in the machinery business of 15.4%.
And so far, this The business unit is in a very good shape. The market circumstances are still positive. The farmers are investing in Central Europe, and we do not see yet the end of this story. The Global Produce business, one of our key investment pillars, as you know, is performing a little Lower nevertheless as last year. Nevertheless, you see here on the right side bottom, the price development for European apple harvest and it's around about €0.77 €0.74 per kilo, which is a very good development.
In New Zealand, the apple production, the volume Is below the previous year due to the hail damage and labor shortage. This has to do that due to the corona crisis and the ban. The government doesn't allow that harvest workers are coming from Pacific Islands to New Zealand. And so far, From the process point of view, we had here some problems. Nevertheless, we stick to the budget.
Germany, very good development due to the pricing, but we have a poor quality and smaller quantities Also due to heavy rainfall and all these negative circumstances. Bottom line, the prices are above Average. We turn to Page 14. Here you see excellent performance of our Sifitra Group in The Netherlands and Rotterdam increase of 14.5 percent in revenue of €2,500,000,000 €20,000,000 EBIT. The reason for that 1st of all, the volatilities led to a higher margin secondly, The development of the prices and the demand of the customers are aligned.
In other words, we have Higher volumes in commodity traded as we normally do and want to do due to the risk which is involved in this business type of business model. But the most important message is that our specialty strategy, the business with specialties like Pulses, what else, organic niche products and so forth Vitamins and Minerals for the compound feed industry in Europe is in an excellent shape. So we are really more and more A specialty company for the compound either compound feed industry or also for other industries Where we can provide to our customers niche products. And this is a global business. It's much more stable As the pure commodity business and so far the decision which we have taken a few years ago to Change our business model and become a specialty company was the right thing to do.
We turn to Page 15. This is very interesting because here you have the consolidation of Germany, Austria and some Eastern European countries. You see €2,100,000,000 revenue is a little bit higher, 7.1% as last year and nearly €40,000,000 profit for the first half year twenty twenty one. What is the reason for that? We Benefit as well as the Heathrow, by the way, from the rising grain prices.
We had a good market Marketing season 2020 for the 2020 harvest. And we have some excellent profits. Some of you would say windfall profits. Of course, this has to do with an excellent performance of the management, the fertilizers, the stock levels we had on stock, We bought for a much lower price as we had sold it. And in between, we call this margin and is a profit where we are living from.
And the positive seat sales trend is also With 12.9% part of this success story and the feedstock with plus 8.2%. With other words, Here you see a much better situation also in Germany as we had over the last years. This does not necessarily mean that we are through The restructuring process, we are in the middle of. We are closing sites, shops. We are reducing our capital employed.
We are reducing the Capital Invest, invested in sites, silos, harborsites and so forth. And so far, we are in the middle of the restructuring process, and it will take another 2 years, as I said, during the last meeting. If you turn to Page 16, there you see that the machinery business, revenue wise and EBIT Wise is in a very good shape. Of course, we are minus 7.5% on the EBIT, but this has also to do with the Chip crisis, 1200 tractors, for instance, are still in the manufacturing plant, Cannot be delivered at this point in time. Workers and specialists from Baeva are supporting Ecco so far To go through the final assembly process successfully, but it will take a little bit longer as We thought last year due to the chip situation.
And nevertheless, we are still positive that we will make The budget and that we are more or less on the same level as we were last year. I was now talking about Fendt, the same applies, of course, for The Klas product portfolio. As well, interesting as always, Our service the billable hours and the services are in excellent this time. Turning to Page 17, Global Produce. You see stable revenue more or less.
The decrease on the EBIT side has to do with Problems, I explained already in Journeys and Growers in New Zealand. The logistics are the bottlenecks in Australia and in the United States, Unfortunately, and in PFC, our tropical food company in MasTec in the Netherlands, we have as well Higher sea freight prices and well, it's hard to get the charter vessels at this point in time and all the containers you need To ship all the products from especially South America To the European retailer market, finally, we think we will make The budget, which means on the same level as we performed last year coming to building material, I think this is easy, really easy to understand. The overall market development is very positive. The German Construction Industry Index is On a very high level and so far the market circumstances are very useful for us and you see that If you turn to page 20, that the revenue is increased 13%, nearly €1,000,000,000 And the EBIT with EUR 33,600,000 is an outstanding result for the 1st 6 months. If you are following us for a longer period of time, you know that sometimes we have even after the 1st 6 months negative Result in getting material because the best months normally come in summertime.
Of course, now we have a very And stable weather situation, rainy situation here in the southern part of Germany. We'll see what's happening, but this is really outstanding. And I'm very happy also with the part of the project development within this EBIT contribution. It's still not as As we said, it will be, of course, because it takes time. We invested now a lot of money for all these building projects.
But this will be one of the key pillars of this Business segment in the future. Then the last Page 21, Innovation and digitalization, well, it's always the same story. We are investing in the IT, in the farm facts And in the digitalization environment for us internally, but also for the customers and so far Minus €4,800,000 this is not an operational negative performance. It is investment in the future this company. So this was my first shot now regarding the first half year, and I hand over to Andreas.
Andreas, please Explain to the analysts and all listeners here the group financials. Thank you.
Yes, Karl. Thank you. Good morning also from my side. Yes, just a very few remarks to add on the financials. I think you have the snapshot on the balance sheet and the income statement.
I'll jump over to Slide 20 3, it shows the other activities. The other activities, as you know, comprise everything which is not in the Three segments, so all the company overhead costs, and we came out at half year With minus 30% compared to minus 35% last year, mainly driven by lower overall expenses, Other expenses, travel expenses, something like that, as you know, COVID driven, a minus. We received already the 1st bank dividends again in the volume of EUR 2,500,000 from Austria And expect another part to come from the German banks as well as a second part From the Austrian banks, maybe, we hope that we'll what we'll see in the 3rd or Q4 to come. So the overall outcome, and this is what it's What we are expecting here, you know, that we had a minus €80,000,000 overall last year. We expect down of around about SEK 20,000,000 compared to the previous year on the other activities just to give you a flavor Where we stand and where we will be at the year end.
The next three slides just show the summary of the segments, What Claus reported in-depth on these three segments, just And on the energy side, maybe because we reported that in the half year report, you may reconsider the Event that the industry has seen in Texas, the extreme weather event on the Renewable Energy side, remind you what RWE account for. Also, our 2 facilities that we have over there has been hit By this event, and this has already been included in these numbers in the first half year with a volume of overall EUR 14,000,000. So that's already in there as well as the transaction costs for the capital increase that we closed in the Q1. So that's also an event of the first half year. That is also here included in the performance of the Energy segment.
So that shows you how strong the overall performance was in the first half year. Also on agriculture, fantastic figures. If you summarize it and compare it to the past, The highest we have seen over the last couple of years with an EBIT of overall 88 Compared to what we have the years before, an EBT of EUR 62.5 So really very strong performance in the international, as Claus pointed out, in the international business, but as well as in our national our domestic business here In Germany and Austria. Finally, building materials on Page 26. I think everything has been mentioned on this.
And the summary The overall income statement for the 1st 6 months on Page 27 shows that we end up with an EBT of CHF 94,000,000 That gives the consolidated net income of CHF 66,800,000, which is one of the driver also in the if you look on The equity development within the 1st 6 months, I'll come to that in a minute. And Interesting enough also that the share of the mother company is at roughly EUR 42, which leads To an earnings per share of EUR 1 compared to minus EUR 0.54 the previous period. Finally, the view on the balance sheet, as I mentioned, it's just a snapshot as you see from the seasonality driven. You see that the overall Assets is up to SEK 10,000,000,000. That's mainly driven by 2 effects.
The one is The RE business, which is coming out strong throughout the year, that will be the driver also in the final quarters in 2021, now as you are used to already. And the second is a strong business that is which is reflected in the The strong business in the agri sector, both the international and domestic business, brings up the receivable That will be back on track by year end. And if you look on the equity, an increase of some SEK 600,000,000, which is higher Then only the capital increase by the investor, which came in at 5:30. The one thing was the positive Net income of €66,000,000 but also a second effect of some €30,000,000 which comes out or came out of the Increase of the interest rate for the pension liability that gave a positive effect on the equity of some 30 roughly EUR 30,000,000 at half year's basis. If you compare the total equity now to the level of the balance sheet that we expect at year end Compared to last year, the equity ratio is, as we mentioned, above 20%.
I think this is The only and the most interesting now after this first 6 months excellent performance and I think
a very solid basis For
the second half of the year, and Claus will reflect on that what we expect for the total outcome now. Thank you.
Well, the outlook 2021, Josko mentioned that already. We announced to you guys that We expect a much higher better result in 2021 than 2020. So I don't know what should I explain. So by We will 1.1 Gigawatt sell, and I think that we have still positive development in the Trading business, conventional energy is going down, but will be overcompensated by RE. But the two business Almost don't have any link.
It's just energy. Agriculture, we expect a much better performance than last year due to the arguments I Shared with you and building material, we have a great market environment here in Central Europe and so far. It's Very positive. We expect an excellent year, record year 2021. I think this is sufficient.
We are happy to take your questions.
Yes. Thank you, Professor Lutz. Thank you, Mr. Helber. So we are ready now to take your questions.
We'll now take our first question from Newt Hinkle. Mr. Henkel, your line is open. Please go ahead.
Yes. Thank you. Good morning. From my side, Congratulations to the great HR. One result, I've got 4 questions, if I may.
First question is on SIFITRA. You made clear that the Trading gains are a part of the business model in that space. Could you give an indication how much the trading gains were better than average level. So I see that there's probably some like average contribution from trading gains. Is it much better in H1?
Or is it yes, maybe an indication would be helpful here. And then three questions on Baixaure. First of all, you did not change The guidance concerning the gigawatts that you planned, that's 1.1, that's also what you said at the end of the year. So my question would be in H2, will we see some growth in revenues and in EBIT despite Great results in H1. So could you also give some indication here?
That would be fine. And Second question on a detail. You said that the capacity installations In onshore wind energy, we're down in the first half here. Maybe you can say something what's point, what's going on in the market here? You said something about China.
Maybe you can give more details, that would be helpful. Last but not least, Yes. Very strategic question, a long term question. You said that at some point in time, an IPO of Baibary could be an option now that we see very, Very good results, very good business at the moment and also some competitors Already are listed. Is that something where you see some where you could think about speeding up the process?
Or is it still
Mr. Henkel, thanks for your questions and for your remarks. I'll start with the last one. The IPO or a potential IPO for our E is not yet planned. Why?
Because we just We finalized the process a few months ago with EIP in Zurich. And so far, this is not, at this point in time, a question, but I do not want to exclude it Completely for the future. We have a budget basis with our partners in Switzerland For the next 7 years till 28. But of course, in cases which I can't describe now, It could be a possibility to go through this IPO process. But at this point in time, we need That or the need is that the management is working on the project, that the management has To be a little bit more used to the new leadership and governance structure, And this will take time.
So at this point in time, no. Then the question why do we have the overall Little decrease in the wind onshore, building activities or the volume To be constructed over the next years, it's not just this year, but over the next years, there's a little decrease. And this has to do with the China and the United States because they built much earlier some facilities Last year as it was planned, so it's not a postponing impact, which we are announcing quite often. It's the other way around. So they They went through this process earlier, so we have a pull forward Effect here.
It does not mean if this is the background of your question, it does not mean necessarily that the overall market Demand is decreasing. It's just the question, when are projects And at all, they are going through the process for all these projects. Then the next question regarding Of course, we said 1.1 gigawatts for this year. I must say this has that's Just a forecast. And of course, it could be also a little bit less, sell them more because it depends always on the Fulfillment of all the requirements, also legal requirements and stuff like that, that we are able to create the connectivity to the Net, the energy nets in the different countries.
So the plan is 1.1 gigawatt. There's not a change. You saw EUR 50,000,000 now for the first half year. We expect A higher contribution in comparison to last year from the trading business. This is in an excellent shape.
And as Andreas said, we compensated in the first half year this damage in Texas and some other One timers. In other words, we expect, again, a record high in our RE as we at the headed over the last years. But I hope you understand that we do not want to give a clear figure based guidance On that, but the key message is again a record high NRE. And then your last question, Sifitra, trading gain, if I understood you Correctly, you mean what is the share between the specialty business and the commodity trading? It's more, I would say, fifty-fifty, maybe this year, sixty Specialty 40 percent commodity trading, especially, soya business, corn, wheat.
So it's extremely important for us. We are the key supplier for the combined feed industry in Europe. And Yes. That's it. We don't speak about margins and yields and so forth on the basis of product lines.
But the split is fifty-fifty-sixty-forty, something like that. And we said always, what is our goal with the investments in the Specialty business To have over the years a sustainable €40,000,000 contribution on EBIT level from Assiketra and the split is this fifty-fifty, sixty-forty, seventy-thirty, whatever, because it's a very volatile business, not only in the commodity Business and trading, of course, and supply chain management is very important, the supply chain, also from the business model, But also in the specialty business, not so volatile because we do not depend on the stock market development. But If you have a problem with the harvest, weather conditions, whatever, at any place on this planet, then we could be affected. But bottom line, This year, the first half year is an excellent performance. Is this answering your questions?
Absolutely. Thanks.
And Mr. Henkel, if I may, just we're talking about trading gains, absolutely right, what Claus mentioned on the Fetra, But I think trading gains was more coming through in the domestic agribusiness in the first half year this year because What we realized there was a fantastic book that we kept from last year's harvest. And we mentioned that in the last conference is that we have a good Booked Cap Forward and that realized was realized here in the 1st 6 months. So it's more we're talking about trading gains, The effect on the domestic business this year?
Understood.
Thank you. We'll now take our next question from Guido Heumann. Your line is open. Please go ahead.
Yes. Good morning, gentlemen. I think three questions from my side. The first one would be On the pipeline, you mentioned that it grew to around 15 gigawatts. Yes, could you maybe Potentially share some more details on where it grew, as in which region and maybe It's rather solar or rather wind.
The second question would be on your full year guidance. And If I take the upper end of your EBIT guidance of plus 20%, And if I'm not mistaken, then I derive for the second half an EBIT of around €150,000,000 So it implies as even the upper end of the EBIT range implies quite significant, I. E, about €50,000,000 So could you indicate where you expect this decline And yes, 2 more questions. Unfortunately, I didn't get the figure Of your taxes damage, not precisely, was it 40,000,000 or was it 14,000,000, €14,000,000 And last but not least, I think you also mentioned windfall profits, which is Absolutely okay and great. As you mentioned, to certainly management skills.
But Don't you think it makes sense maybe to quantify them just to avoid that people extrapolate, Yes. This year's figures and then we run into the disappointment in the coming year. So I'm particularly thinking About the Building Materials segment, I think you built up I assume you built up Stocks at relatively low prices, then we had these price increases, which probably was also part of the success In this business in H1, so would you like To specify or give more details on the scale of windfall profits you might have Okay. That's my questions. Thank you.
Okay. Thank you. The windfall profit in fertilizer is €3,000,000 And the open book, as you said, was €12,000,000 So this explains the situation here. In Germany, it's only the German operation by Wacker. So the next question was your question regarding the damage in Texas.
It's not EUR 14,000,000,000. It's EUR 14,000,000,000. It's EUR 14,000,000,000. It's €1,000,000 is covered in the EBIT and so far in the P and L statement already. Then your question regarding the pipeline, 15 gigawatt.
Most of the increase comes from Europe, also Germany, we made a little acquisition here to get the options to build wind and solar facilities. And The key volume comes from solar because we think that the solar business especially has an interesting Growth opportunity, and this is also reflected in the overall market picture I showed you in this slide On the left side and now Andreas to the EBIT situation, what is our comment on that?
Yes. It's always an easy way to calculate what was last year, what is this year, the second half of the year, and you're completely Right. But that's mostly driven by the realization of projects in the RE business. So it's not a decline that we expect. Our guidance that we gave in the ad hoc earlier this month was that we expect an increase on profit on EBIT wise profit Compared to last year, between 10% 20%.
So that was the estimation that we gave. Decline, I would not say it's a decline. We expect a good contribution also in the renewable energy As we have seen it all the years before, what is a little bit, How should I say reluctant compared to what might be expected is the Building Materials sector for the second half of the year because we are a little bit cautious what we expect here. You have seen the number that we already achieved for the half year, it's EUR 33,000,000 or EUR 34 €1,000,000 And you see the you can't double this because then you would be at €66,000,000 So overall, then you have there A slowdown effect in the second half of the year to expect. All the other business, I would not say that it's a decline in there.
Yes. But it's for the best guess that we could give from today's perspective.
If you make a simple calculation, 144x2 means 288. This is an easy calculation, but it's not reflecting Any market circumstances, changes, damages, weather conditions, maybe early winter, Breakthrough or something like that. So this such a calculation is not really reflecting Also the risk profile of this company and the different business models. So I would be cautious and careful how I'm going to calculate in principle Going forward business in the second half. So if you make some reductions risk, then Also the seasonality of some business models which we have.
The question with this chip crisis, If I hear and if I listen to the experts in the company where I'm Chairman of the Supervisory Board, one of the key Cybersecurity companies in the world, and I'm listening to them and ask them what is to be expected on the chip side, the chip crisis. And They say, well, we expect the end of this middle of 2022, but also with the So we have such an uncertainty in many business circumstances that it is not really easy for us to give a Clear forecast figure based. Of course, we have one internally, but we do not share that with you just for security reasons Due to the volatility in the different markets. So that's the machinery business, just one it's just one example. We are still positive that we get it done in this year, but you do not really know because we depend also Many sectors on the manufacturing side and the manufacturers, whether they can do the job or we have to wait Yes, for a few months to get the product shipped to the customers.
Is this answering your question, Manu?
Yes. Perfect. Very clear. And thank you.
Thank you. Thank you very much. Thank you.
Thank you. We'll now take our next question from Svein Sawyer. Your line is open. Please go ahead.
Good morning, gentlemen. Also from my side, congratulations on the results. Two questions. I'm sorry if I missed it, but the first one is regarding the agriculture equipment. In the first half, the new Tractor registrations in Germany were up by 15%, but the sales in your new machinery We're down by 14%.
Maybe you could explain the reason for this? And the second question is regarding the issue with the container bottlenecks. How do you see this situation going forward? Do you Maybe easing a bit or should we expect more cost burdens regarding the container shipments?
Thank you, Herzl, for your questions. First of all, Agri Equipment, we have some postponing effects here, and the order intake is Extremely high, better than last year. But as I said, just 1200 tractors on the facility The final assembly Is not yet finished due to the chip prices. So that's one thing. We could have done much more.
The demand is there. So no reason to be concerned. The only thing is do we get it in the books in 2021 or This is Dan in 2022. And regarding the containers, that's for instance one risk assessment we made With regard to the simple calculation, we take the first half year result times 2 means so much. This is part of our risk assessment that the container threat situation will not be over we believe will not be over over the next Weeksmonths has to do with China's demand, has to do with the U.
S. Demand and also some other Asian countries And also the stream of goods from Latin America to more to China than to Europe. So the availability of the containers Is not to be improved or we do not see really an improvement here, Radeel. You have the biggest? That's okay.
Good. Yes. That's the analysis we made internally. But I can't give you a clear figure on that because It's also driven a little bit by incident and you have every week another event You have to restart your calculation. But it's not dramatic, maybe that's the right word.
Just to calm down a little bit this tension on this container and vessel this charter vessel situation. Is this fine for you and you need more?
No, perfect. Thank you. Thank you very
Congratulations on the first half. Good morning. I have two questions. The first is on the digitalization segment. And noting that losses are reducing, I'm wondering, does that imply you are investing less in the segment?
Just providing a bit more color there. And the second question is looking at at the Renewable Energy segment. And you noted that one of the great things About the 2 acquisitions that you've done, was this brought you more people, more qualified people. So my question is, is the availability of qualified people With the number of employees that you now have, what level of annual revenues
Thank you very much. Yes. Thank you, Romain. I'll start with the last one. The first one, maybe you should repeat it because you were disconnected technically.
That is no problem. Step by step, let me answer the last question. You're absolutely right. That's a war for talents, so to say. We need engineers, project managers and people working in the back office.
And so far, all these little acquisitions we have made, for instance, in Germany, the Northwind acquisition was 700 megawatt and the French Interpol SRS with around about 600 megawatts, fulfilling Our pipeline, that's one thing. The other thing is we need people. And if you look to the growth of FTEs, more importantly, The growth of people working for us, I think we are above 3,000 employees meanwhile on a global basis, of course. And you are right that the qualified people and the lack of these guys and qualified people And employees, is the bottleneck for the to increase the volume of projects. That's one thing.
And the other thing is, of course, also the time to get the permissions from governments, local authorities and so forth, Which is in some countries not easier or didn't become easier as it was in the past. So there are 2 and 3 parameters Which are important for the consideration what is possible. So and we have a budget with EIP, our co investor From Switzerland till 28. And on this level, we expect a continuous Growth average growth rate over the next years. Do we have a figure?
We do not want to speak about the bottom line, But it's a growth rate year by year regarding the volume and also the profitability. But we don't provide the Capital Market the details regarding margins And yes, profitability at this point in time. Otherwise, it would be a contradiction to my statement that we just described the development and the Market Opportunities. Andreas, you wanted to mention something?
Maybe just one remark because you asked On the turnover, the overall turnover, the revenue last year in the renewable energy was SEK 2,600,000,000. And this is, Of course, driven by and also for 2021, it's driven by the very strong trading business on the solar modules and the converters. So I think the interesting thing is to get people For the project development, and I think we are well on track because we are a very attractive company for the market. So we increased the number of employees, as Claus mentioned, year on year by roughly 400 people. So it's more than roughly 20%.
I think this is good for us, And we are able to achieve our plans with the staff that we have.
And we must be also careful how many people, how many companies, how many New infrastructure we take on board because it's not easily consolidated. And also here, it's, of course, a bottleneck because you can't do all at the same time. Do you mind to repeat, please, your first question because there was a disconnection? Is this possible, please?
Yes, of course. The losses in the digitalization segment reduced. So my question is, does this reflect Lower investment. Or is there something else happening there?
It's just lower investment. We are only on Yes, Andreas?
The main reason for that is that we disclosed in the previous year the e commerce activities within The other activities, and we changed it at year end last year, now putting part of this e commerce activities losses or the costs that we have directly into the operational segment. So there's it's not a decline in investments in these New farming things systems, but it's the only thing comes out of the
e commerce disclosure. Nevertheless, we are we took the break a little bit on the development for the future Applications on cloud based applications for the farmers because we go through a strategy process at this point in time. We change the management as new CEO, And this has an impact as well. It's maybe only postponing, but we Think about the strategy because there is no revolution in the agribusiness. So to say, the people are very reluctant to invest In IT infrastructure, in applications and in software to improve the processes.
And this has to do with a Small structure of the farms in especially South Germany and in Austria. And so far, The people are a little bit the farmers are a little bit reluctant. Now we are in the middle of change generation change, so the younger farmers are much more In favor of IT and software and online and blah, blah, blah and all these things. And so far, this is a it's a changed process. And I said that over so many years now, We do not expect a revolution.
I was sometimes criticized for that. Now you have the facts on the table. It's not only with us. It's also with other companies, Which we're investing money in IT and in applications for the farmers, for the customers. And it is not it's not so fast such as a fast growing market As it was expected by our competitors, by some manufacturers, we never thought this will take Just a few years and then we are something like, I don't know, Google, Amazon, Microsoft, something like It's a niche market.
If you look to the overall market environment and volumes, you can sell volumes, I mean, licenses and maintenance contract just in Europe, I would say one of the big shots would not invest here because It's too small. Nevertheless, for us, it is extremely important as a supplier to a customer solution provider To the farmers as customers, we need to have this product portfolio available for them in case that they're going to invest much more money. And in Germany, by the way, farmers are not really happy to pay for Software and Maintenance and especially for consultancy because we have the local authorities, the so called farm authorities, And employees are specialists who are advising the farmers without any costs. And so far, It's not easy for a company for a business company to make money in this sector. Nevertheless, it's crucial for the A future perspective and to protect our business.
Right. So are you forming relationships with
But in this situation, we are competitors. And I try always to convince ministers, Politicians in the agribusiness to stop all this because the state should not be authorized to be involved in business activities. And I say always, this is unconstitutional on the basis of the German Grundfkels, the German constitution. But I have to admit, I was, Over the last 13 years, not really successful because people are working In this sector, in the local authorities. And they, of course, they want to have a personal future in this business as well.
So that's a
Okay. Goodness, it's quite complicated. Thank you.
Yes.
Thank you. We'll now take our next question from Norbert Koliwoda from Research GmbH. Your line is open. Please go ahead.
Good morning. Congratulations to your very good results. So my questions are, you implemented SLP for HANA. So is this Already finished and in regards of optimizing your inventories. So do you have Good progress, maybe some details.
And then maybe a general question about the Chinese 5 year plan you mentioned, Mr. Professor Lutz. I would be interested Are the business Hussonces as or the dealing with this country the same? Is it more becoming more complicated? Or do you see much more chances in the future?
Or is the competitive environment there Increasing, so maybe you give us some ideas. And then, yes, we as analysts are missing the most. We work with the discount cash flow model and trust. Am I right so that we make estimates on the energy segment For the coming 5, 6, 7 years with the sales growth of between 10% 15% or so, this is
Okay. Andreas, still reflecting your last question. I'll start with SAP. Hanna, of course, you can't implement this major project, not from one analyst conference to another one, Which would be good, of course, but it's not realistic. We started a project that's called Core for Bioenergy, and then the rollout process will be all over the world in Most of our subsidiaries and at this point in time, we are still in defining the Requirements from our business units in combination with the calculation financially plus The advice of our Chief Information Officer internally.
So we are still in the design phase, so to say. And of course, this is a very complex project. It will take a few years till we are through this project and this process. And finally, investment is €100,000,000 to €150,000,000 as it was with S and P are free Already. So don't expect too much at the same time.
And I think it's also good for the company because if you change too much parameters At the same time, you have you are jeopardizing your business. So but as far as I can see it, we are From the time line and from the budget, we are on track. Regarding China, of course, this is a very complicated and A very interesting question because China is becoming more and more important for us From a business point of view, you know that New Zealand is more or less depending completely on the Chinese The performance or the performance with the Chinese customers. And China Synchro is one of our key business pillars On a global basis in the Global Produce business, so China is extremely important. What do we see?
First of all, we have an increase of Volumes to China with our Apple business, berries and all these things. So I'm happy with the development here. The problem is the way the other way around. The procurement for solar models, modules, models, Solheim modules and also other devices we need in the renewable energy sector Due to the discussion which we have here in Europe and the law, which is called the Lieberkattensoch verspliekengassettes. So the acts we have in the Federal Republic of Germany regarding Human rights, sustainability, first labor and stuff like that.
With other words, this is more and more A complicated situation for us, and it's an unclear legal situation. What can we do? What are we not allowed to do? And it's a disgrace for the politicians, to be honest, here in Europe. We think we can now, as companies or they think, these Politicians think and believe that the companies can get the human rights situation under control, which is completely ridiculous and nonsense.
And that If you read what we are publishing also in my second live job, so to say, President of the Chamber of Commerce and also as CEO of Baibars, I'm really criticizing All these regulations because it's jeopardizing our business. It's jeopardizing also the business Relationship also on a human basis with our Chinese colleagues. I do not say, of course, that they have anything against human rights. This is nonsense, yes? But That's the task for the politicians to make sure that people are not working in a first labor environment for us.
And so far, Situation is a little bit critical because China agreed upon a new act, which is called anti sanction law, Which is the answer on our litho cat and cassettes and also the different export bans and import bans From the American government. So that's a very complex and complicated picture. As far as We are involved as Baiva Group in this business. We do not have a negative impact at this point in time on our business. I do not At this point in time, for the import of the solar devices from China and the export from The Southern Hemisphere with our Global Produce product to China is not jeopardized as well.
But in principle, There are some sites around, of course.
Okay. Okay.
Andreas, Mr. Zarzaur, hello.
Hello. I was really hard considering about your question. What Should I answer without saying nothing on this? Firstly, I would say on your for your discounted cash flow, I know that you calculate the discounted cash flow coming from the revenue. And if you just easily put A growth rate on the revenue that would probably guide you in the wrong direction.
Firstly, what I want to say is What we announced to the market is we have a new strategy set up into 2025 to increase Group EBIT, sorry, now I'm at revenue on my own. A group EBIT between €400,000,000 €450,000,000 There's a portion in there for the renewable. And the second remark that we made to the market already is Within the next 2 years, 2021, 2022, 2023, we want to double income From the Renewable Energy Sector. You remember that when we announced the transaction with EIP, we said, okay, for the earnings per share. Now for the next 2 years, we have A slight dip, but that will be compensated after 2 years by the doubling of the income on the EBIT.
So if you put that in your cash flow model for 2023 and then increase the EBIT number On an amount between, let's say, 50% to 20% per year, I think that would better guide you on the results On the models which could be absolutely volatile, which could be price affected, which could come up and down as you see it in the other Commodity activity that we have. And the second reason is that we changed the model just from selling Projects and turning projects into the IPP structure that will deliver a more stable cash flow coming from The power production in the future. So I would not be happy if you just do it on the revenue number. Try to do it on the EBIT number and I think we will both be more happy.
Okay. Yes, this helps. Thank you so much. Good.
Thank you. We'll now take our last question from Oliver Schwarz. Your line is open. Please go ahead.
Thank you for taking my questions. Hello, gentlemen. Good morning. I was set to learn that you are sort of on beat on the upcoming development in H2. Mr.
Lutzky stated it would not be appropriate to take the EUR 144,000,000 double debt and come up with the number For the full year, I would fully agree on that. If we had done that in the past, €110,000,000 for the full year. Thankfully, numbers were much higher At year's end, due to the fact that the second half of the year tended to be much Stronger than the first half of the year in every business year in the history of Veva. And hence again picking up on a question that was already raised before, what the underlying assumptions That you are that your outlook is based on when we are talking about a significant decline year on year That is expected versus 2021. Specifically, I'd like to discuss with you the sublevels of fertilizers.
Are they depleted now? And are you willing to rebuy the same volumes you did last year? Or is the high level prices, currency, something that would have you shy back from building inventories. Secondly, obviously, the trading business Benefited from the volatility in Staple Foods. Is your view that this volatility might turn against Faiva or that the volatility might May die down.
So the profit margins also are being reduced in the second half of the year. And again, on the development in the second half of this year, In regards to working capital, when we are looking at working capital, when we are looking at the increased levels of inventories, But also on payables, what's the level of working capital that is to be more or less expected by the end of the year? And hand at hand with this, I think, goes to question in regards to the net debt that is to be expected at the end of the year. I fully appreciate that we are living in an, let's say, uncertain environment, and that's especially true for the business model of BAVA. However, I have yet to see a year where the visibility and certainty in regards To oncoming development in regards to Baiva's business is more or less certain.
So basically, What is your key assumptions that you're facing your outlook
This is a very tricky statement, Mr. Schwartz, but I expected that, of course, from you. Otherwise, I would be very disappointed. It's interesting that you see a downturn in the second quarter in the second half because Just to summarize for all the colleagues on the phone and here in our conference room, it's quite simple. You take the 144, You say the second half is normally much better than the first half.
So you don't come to 288,000,000,000, you come to 300,000,000,000 I don't know what. And so far, if this came true, you would get the Gottlieb Reif Eisselnadel from the Deutsche Reif Eisseln Fabant from my side as Vice President. So That's the one thing. The other thing is coming more serious now to your points. The fertilizer and the storage to be expected in autumn Where we are buying for the next season, the volume will be decreased because the price level is extremely high.
And you know that in 2008, 13 years ago, as I joined this company, we had our waterloo, especially with the fertilizer volume. It was too high. The speculation from the previous management was To get windfall profits because they expected an increase of the prices, Which was not the case, and we lost within a few weeks, I don't know, €30,000,000 profit just due to the fertilizer volume. This is not the case. We are very careful In my statement before, the prices are extremely high.
Then regarding the trading business. So trading, I guess, you mean, Zevitra, you mean our supply chain management, The origination and the supply chain management with the Grain here in Germany, these are 2 different cups of tea Because as you know, we have a different view on the open book here in Germany As we have it in Zifitra. For Zifitra, I do not think that the margin will decrease. I think we have a stable situation also in the specialty business, which is roundaboutroughly50% of the profitability. Volatility will not hurt us At this point in time, and we see it also in the order intake in Rotterdam.
In Germany, it's a little bit different because it depends when we ship when do we ship The grain to the customers, to the mills, oil mills and so forth. And this has to do to get it done before at the Ultimo, 31st December or is it just next year? Then we can post the profit from these Transactions in the P and L statement in the maybe in the Q1, first half year in 2022. That's a little bit A difference. And this we do not know at this point in time.
The second point is, as I said, the machinery business Could be a downturn if we do not get the final assembly done, especially in Maat Oberndorf due to the chip crisis and also some other Half devices, which we need for the final assembly, are not available in the volume we need at this point in time. So this could be An impact could have an impact, and we have to take this in consideration making our forecast even if you just described the forecast. The third point is, as always, of the last years, we had always a little bit luck also with Renewable Energy that Just in time, the project has been finalized. We got the permissions. We got the connections to the energy nets.
This could also be Once upon a little bit different that we have a postponing effect and saw an impact on our P and L statement. And we have So being very careful as business managers, we have to take this in consideration As well, that maybe there is a postponing effect. We don't have a concrete event right now. We don't have concrete Negative forecast, so to say, from our management in Renewable Energy. Nevertheless, it could happen.
This is also We deduct virtually deduct something from your calculation. And well, I think these were the key elements. And then taking consideration that we have an early winter outbreak here In our building material customer areas, then we have an impact on building material as well. Of course, the SEK 33,000,000 EBIT which we have right now is excellent. This was our forecast years ago for the Full year.
Now you could say, okay, SEK 33,000,000,000, then we make SEK 60,000,000. Maybe we make SEK 60,000,000, but we don't know. So being careful, we have to deduct here Also a significant amount of money or, let me say, EBIT from this figure. So that's the Logical system behind our forecast and forecast process. The forecast is a rolling process as in, I think nearly every stock listed company, and it's an up and down and up and down.
At this point in time, I have to admit it's very stable. We see a very good 2021, but we make deductions just to be on the safe side of life.
I fully appreciate what you just said, Mr. Lutz. But to me, it seems all the risks That you alluded to should be reflected when you give, let's say, a guidance range. All the risks should be reflected More or less in the lower end of the bracket, which would be an increase of 10%. And with all the risk or at least part of the risk not becoming reality, but let's But things just working out.
That would be the upper range of the guidance, and that would be plus 20%. But the plus 20% still reflects a significant decline year on year in the second half of this year. So there must be something that you baked into your guidance that gives you, let's say, a lower point For the start of the calculations, before you factor in all the risks and you factor in all the boons that also could the end of
the year. Mr. Schwarz, just to make one point very clear, we are Neither a positive nor a negative sent back, okay? It is really a realistic Estimation from our side, we think if you are right and we make much more, What are we going to do then? Then he gets Dom Perignon.
I'll talk. Then we go ahead talk.
Not the needle. I want the needle as well.
And you'll get a don't pay my personal assistant here, you take a note now, Mr. Schwartz will get a don't pay your jargon champagne, if he is right. And I think we can And the good needle, yes. Okay. It's just a joke.
I'm kidding. But nevertheless, you get this, Bobby. In case of, but summarizing all these different risks We see our assessment is as it is. And we do not underline that with figures because this is not our Communication style to the capital market. Andreas, you want to Yes.
But I know the exercise That you do, and I just did it for my little paper here. I don't like the Too much talk about risk and decline of the second half of the year's performance. I think we are strong in our core areas. And if I just calculate how you do it and coming from this 54,000,000 contribution last year after 6 months up to the EUR 215,000,000 that was contribution of EUR 160,000,000. If I look at this year's and what we announced to the market, An increase of average compared to last year between 10,020.
And if you do the best guess, then do the middle, it's not a guidance. To the 15, and that brings you up to 247 compared to the 144 that we already have. So the delta is €100,000,000 So the difference between last year's second half performance and this year's second half performance would be €61,000,000 And if you then look On the results that we had in the Renewable Energy last year, it was a minus 1 Compared to the 50 that we already achieved now in the 1st 6 months, so this covers most of the delta. And I would say, Yes, we have some risks and we have some things to do, but it's you can't just put the performance given the renewable energy business that we have And what we already achieved now after the 1st 6 months in 2021, just to paste and copy into the second half of the year. I think it will be a strong one in the second half of the year as well.
It's continuing on these core elements, but it's not that easy. As Claus said, we have risk, but we are not sandbagging anything. So but please don't estimate now a decline compared to last year's performance. And this is the
logical consequence of Becoming more and more a project company because we don't have this stable up and stable down and stable forward, whatever. It depends On the accomplishments in the project businesses, and we have more as we had in the past. So if you have a pull forward effect, for instance, in the first half year with 2 or 3 projects, you don't have that then on top In the second half, it depends on so many different parameters. I think this is one of the key aspects we have to obey For the forecasting process internally, but also for you, we can't say due to the fact that we sold 2 projects or 3 projects now in Japan, In Sweden, in Germany, in France, for instance, that we expect now the same on top in the second half. Yes.
We have a clear pipeline and this is the
basis for the calculation. And maybe one final comment on this, where you definitely should expect a decline, This is in the classical energy business. Remember that we boosted results in the second half of the year last year, and the total outcome In 2020, it was nearly €32,000,000 remember that. That was an outstanding result. We normally calculate something between €10,000,000 and €15,000,000 And 15 would be a good guess for this year's performance.
It would be a normal year. So definitely, there you will have a decline, But this is nothing that we sent back.
Very clear. Thank you.
Thank you. It appears there are no further questions at this time. And I'd like to turn the conference back to you for any additional or closing remarks. Thank you.
So thank you very much for your attention, and we wish You have a nice summer break. Hopefully, it's more sunny than it is currently now. And the next conference call takes place on the 11th November. And talk to you soon. Thank you very much.
Bye bye.
Thank you, gentlemen.