Ladies and gentlemen, good day and welcome to the BayWa Analyst Conference Call Q3 2020. Today's conference is being recorded. At this time, I would like to turn the conference over to Josko Radeljic. Please go ahead.
Yes. Good morning, everybody, and welcome to our conference call on the results of the third quarter for the fiscal year 2020. As usual, Professor Klaus Josef Lutz, our CEO, and Andreas Helber, our CFO, will guide you through the presentation. At the end of the presentation, we will be happy to take your question. All relevant information has been sent out this morning. Additionally, you can also download it from our investor relations website. I will hand over now to Professor Klaus Josef Lutz.
Mr. Radeljic, thanks. A warm welcome from my side as well. Good morning to everyone on the phone. I would like to lead you through the presentation. I guess you have it in front of you. I always say, first, a personal remark. This is my 50th, 50, analyst conference over the last more than 12 years of being in the position as CEO of BayWa. Okay, thank you for the congratulations. Now we come to page four. Page four is the summary of the group for the first nine months. It's an extraordinary positive result, which we can offer to the capital market. The first nine months, our revenue is EUR 12.1 billion, more or less flat. A little decline due to the disposal of Tessol, our fuel station company, which we sold last year.
Of course, also the volatility of the commodity markets and the oil price. I'm coming back to that a little bit later. Very positive result. It's a real result. It's not adjusted. It's not pure operational or something like that. That's the real EBIT, plus of 33% from EUR 77 million-EUR 102 million. In this result, we embedded also the burden of around about EUR 18 million due to the corona crisis, which was absorbed in this P&L statement due to the excellent performance of our operational unit. The extraordinary income of 2019. We made some sale and divestments as you know, may have been compensated.
As always, and we are more and more used to that, the project development business of BayWa Renewable Energy will really take place in the last quarter and especially last four to six weeks as it happened over the last year. We are still expecting a huge rise in revenue, but also in our profitability due to the renewable energy subsidiary. The overall picture is very positive. BayWa is of essence as a service company for agriculture, especially energy and building materials, as you know. In so far, we are not really suffering at this point in time due to the corona crisis. The supply chain is more or less okay. The flow of the commodities and the goods all over the world had no breakdown. A very positive picture. Now let's turn to page five and six.
You can see here the Q3 result, which is really very positive. Nearly EUR 50 million in Q3. The overall picture in comparison to the previous years, 102.7, is a very positive development. We turn to page eight, the overview of our energy sector. Here, the market, the international market developments. No change to the previous analyst conference a few months ago. The renewable energy, the forecast for the global installation in 2020 is still valid. 66 GW for onshore wind facilities and 127 for solar facilities. No change to our forecast so far. It's an increase in the wind business of nearly 20% year-over-year and 5% in the solar business. You see that, especially in Germany, the installation from January to August 2020 has been increased again of 30.2% to 4 GW coming from more or less 3 GW.
A very positive outlook from an overall market perspective for BayWa, which is affecting positively our business as well. The conventional, the classical energy sector is in an extremely positive and very good shape. You will see that in the figures. We have some benefits from the decline of the Brent crude oil price, of course, and a very high demand due to the crisis from the customers. This increased demand is the key reason for this very positive result. Turning to page nine. This is just a flashlight. Of course, much more important will be the final year result, which we are going to report in March 2021.
You see here an increase of 23% in the revenue and EUR 92 million EBIT, but this is just due to the fact that we sold the wind farms in Germany and the Le Champ Grand in France and one solar park in Malaysia. Very positive in this context is our PV trading. Trading modules is nearly 30% higher on a year-to-year basis, and the converters we sold 34% higher than in 2019. Our success story, which started more than 10 years ago as we established our BayWa Renewable Energy segment, still with it. The tendency is very positive and I'm coming back to that a little bit later, because I think you expect a comment from my side, regarding about the equity increase, which we are planning. We are talking about that for more than one year.
Maybe the one or the other guy here listening to me is a little bit impatient, but I think I can relax you a little bit later. We come to page 10, the conventional energy sector. The revenue is lower due to the price development, as I said. Tessol is not anymore a part of our group, but nevertheless, the margins were very positive and the VAT reduction was the reason for the upfront buying of our customers, with a positive impact on the bottom line. Well, you see it. It's 21.5%-26%. In a sector which is over years shrinking, this development is very positive because Tessol was, from a profit point of view, more or less the most important part of our conventional energy sector.
We were able to mitigate the burden, more or less, what we had due to the sale of Tessol. Which we sold for a sensational price, by the way. Maybe you remember. Turn to page 11. I don't want to comment at all because a little bit later, Andreas Helber will explain to you the financials, the P&L and the balance sheet. We turn to page 13, the agricultural sector. Again, the market development internationally, the agri-commodity prices, we have a higher volatility over the last months. Since a few weeks, we see an increase of grain prices. Especially BAST is going to get some benefits out of that. This is a very positive development.
Due to the global grain balance, you see that on the right side of this slide, the storage is going to be increased of around about 20 million tons. That's the forecast on a global basis from 2020 to 2021. This probably means that we do not see, we do not expect a real price rally over the next months. As you know, I'm very careful. You must be cautious with reports as to the behavior of hedge funds, algorithm traders, and so forth, at the Chicago Board of Trade. You never know exactly what's going to happen. Fundamentally, I don't expect a rally. Turning to page 14, here you see BAST, BayWa Supply & Trade. By the way, they are going to change the name. This unit in Rotterdam, this is our grain trading operation.
Cefetra brand, well known in the markets throughout the world. BAST is a little bit artificial and management is going to change. We have a decline of 10% in the revenue. Why? Because we do not make revenues where we don't see a real chance of a profit. It's getting more and more important for us that we are successful with our specialty strategy. Maybe you remember we changed the strategy of BAST over the last two years because we made some acquisitions in the specialty sector, like organic grain, vitamins, minerals and so forth, from food industry, feed industry. It was our intention to increase the profitability in the specialty sector. First of all, this was very successful.
Also over the last weeks, get some profit from the international soy trading due to the price development, but also the supply chain and supply chain management is still in order. Turning page 15, our agri sector, the rest of the agriculture business and especially that's Germany, Austria, Eastern Europe, and our international operation, Global Produce. First of all, we have a great harvest in New Zealand, much better from the quality point of view, but also the volume comparison to 2019. We have a weak apple harvest and season in Europe. Nevertheless, the demand was very high due to the corona crisis and the apple prices in Germany. They see at this point in time a five-year high with an increase of what is something close to 50%. Global Produce, we'll see we will have a very good performance, coming back to the figures in a moment.
The input resources business is weak or weaker as it was over the last years because of the regulation of the Union with regards the fertilizer, then the low energy cost, oil price development in the global market, the price of fertilizers. We are suffering here a little bit. Also, the overall demand for crop protection and so forth, due to the climate situation in Europe, was weaker in previous years. The agriculture equipment or the machinery business of BayWa is really in a very good shape. We see here in the national market forecast and the market development, an increase of 7% with regard to the registrations of new tractors in Europe, specifically the market in Europe. Also, the investments in stable and stable technology, stable equipment of the farmers is declining. Actually, less demand compared to previous years.
This has to do with the consolidation process in the farming business, especially in Germany and in some other European countries. Turning to page 15. You see Global Produce we will be much better than last year, but it's exactly the same profit, 30.2%, a little increase. What is the reason for that? Last year, we had a one-timer due to the sale of the headquarter manufacturing in Auckland, it was around EUR 10 million. So far, operationally, we are much better than last year. Also, the acquisition we made a few months ago, Freshmax in New Zealand, is contributing EUR 2.5 million operational profit to Global Produce. Finally, we expect a very good year in 2020. For us, operational strength has been improved over the last months. Turning to page 17. This is the weakest figure I have to show to you.
This has to do with some significant reasons here in Germany especially, but also Austria is affected. First of all, we are more or less flat on the revenue side. The profit is down to EUR 6.7 million. This is not at all satisfying due to the fact that we are talking of EBIT bottom line, if you include or if you deduct the tax and so forth. We are really negative. The reason for that is we are going through a very hard and also strong and strict restructuring process in Germany. We are reorganizing ourselves in Eastern Germany and we are also reorganizing the site structure, silo structure, the harbor structure and so forth as well. In Czech Republic, for instance, we are in a restructuring process. In Austria, we have to change some parameters for our business.
In other words, the process is tough. We are also laying off people. The restructuring cost, the fees, the severance packages, are not covered by a restructuring accrual. In other words, it's completely included in the P&L statement. What we need here is patience for the next, let me say, two years. It's not only internal restructuring process which we are going through. It has to do with the new regulations of the European Union, the uncertainty with regard to the CAP and the agri policy in the European Union, and the consolidation process in the sector in many European countries. In other words, that's a normal restructuring process. I'm personally, meanwhile, very positive and also pleased with the operational development in our local grain origination and supply chain management. I'm much more positive with the input business as I was a few months ago.
Our responsible board member, Marcus Pöllinger, by the way, his contract was extended yesterday by the Supervisory Board, another five years on top. He is one of our really great talents we have here in the board, 43 years old, and he's responsible for the restructuring process. He was very successful in restructuring the building material sector a few years ago. He's really qualified for this. We need patience. This is a process which can't be finalized and the goals can't be achieved within a short period of time, within two years. He gets the money and he gets the time. Turning to page 18, the machinery business, really great performance. We have an up of 11.1% in the revenue, and you see the profit is very positive due to the increase of sales, the new tractor, 18.5% or what is the figure?
18% on a year-over-year basis. The used equipment, by the way, is a decline of 13%. What does this mean? That the farmers are investing in technology. Why? Because they want to protect their money. That's the background for all these investments. Page 19, Andreas is explaining that. We come into the building materials sector. The overall boom is still valid. We don't have any break here in Germany, especially, you see that on page 21. I'm personally very positive. We turn to page 22. The building materials segment, the revenue has an increase of 10% and the EBIT 68%, nearly EUR 40 million. This is really sensational. Background for that is the boom on the one side in the construction sector in Germany, but on the other hand, the change of the product mix and the change of the strategy within the business over the last years.
We are meanwhile part of building together in joint ventures, building especially apartment houses and so forth. That is the first time included here. In Q4 we expect just out of project business, it's a small profit, but the first step around about EUR 2 million. We have higher earnings driven by the gardening and the landscaping construction at + 20%. We have also very positive developments in the e-commerce business. We are now market leader in Germany. Of course, the revenue is still small, but the margins are much higher. So far, we believe that due to the fact that vacation doesn't really take place, the budgets of the consumers will be invested in gardening, homing, construction, and so forth. Page 23, no comment from my side. That's Andreas' cup of tea. 24. He's smiling.
Page 24, the innovation and digitalization segment is always the same. You see here, it's not a real operational loss. It has to do with our investments in e-commerce, in the software for smart farming, precision farming, and the digital farming process, which is not yet finalized. Of course, the e-business development is expensive, but we need to be part here of this development or we are jeopardizing our business. Page 25. Don't be too astonished that we have 453 million load carry. That said with the corona crisis on the one hand, around about EUR 18 million-EUR 20 million and the one -timers of last year are not and we expect the lower figure may be end of 2020. We will see. I don't know. It depends a little bit on the sale of real estate. As always, that's usual.
Due to the fact that we have a much higher operational EBIT in comparison to the previous years, and we have this load with other activities to carry, you see the operational strength of this conglomerate, BayWa, and I think this has to do with our strategy, the globalization, our international operations, and the restructuring process we go in. This makes me very optimistic also for our agri business that we are going to achieve more positive results in the next years, especially Germany. The international business, as you have seen, is very positive. I hand over to my colleague, Andreas, and he leads you through the financial.
Yes. Thank you, Klaus. What could one add to this excellent presentation of the numbers? There's not really a lot of substantial comments that I would make or could make. I think to summarize it, and we have the numbers coming on the next two slides. To summarize it's really worth to underpin what Klaus just mentioned at the end. The quality of earnings is different to what we saw in the previous years. Not only the increase from the 77 to 102 after nine months, but also the increase in all segments. All segments increased their results, even with the agri segment, driven by Global Produce, driven by BAST performance, also driven by segment. Despite the lower results that we have in the national, German, and Austrian agri business.
There are substantially no one-timers on the earnings side this year in, but we have the burden from the corona issues as Klaus mentioned at the beginning, roughly EUR 18 million-EUR 20 million. It depends as you count it. Some of them will also turn back in the final quarter. With respect to the other activities that Klaus mentioned, we have a couple of deviations in there from year- to- year. He mentioned the proceeds from real estate portfolio management. We will only see in the final quarter about EUR 10 million coming in. We have a currency issue with EUR 7 million now accounted for after nine months that will partly be turned out when we are going to sell the project, final projects in the business. Nevertheless, we have a couple of issues in the other activities that have not come in this year.
If we expect, I'm talking about the dividends from the Austrian and German banks. You are aware of this issue. The German and the Austrian banks are not paying dividends, are forced not to pay any dividends. This means a cutdown of some EUR 7 million for the financial year in 2020 that we will not see. We are expecting them to come double in to 2020. Sorry, 2021 if the banks will remember this, what they promised the shareholders. This is something that we will not have but given, and I take this as a final comment on the other activities, what you might expect for the year-end last year, we had some EUR 56 million, I guess, or EUR 55 million, in total for the year-end.
This is also what I expect for 2020, though we should not have a further big increase in this number, or we could be offset or compensated by some earnings coming in. Expected on level of last December. Well, on the group financials, on the income statement and the balance sheet, you know as always it's a snapshot after three quarters. The final story will be written only in the last quarter and Klaus will elaborate on the outlook in a minute. I think we can just jump over this. With respect to the balance sheet number, also there, a snapshot that will turn back in Q4.
Now, the main increase on the balance sheet structure that you see is an increase in work in process, which is quite normal given that we are turning, or we are a part of turning the renewable energy projects that are mostly completed, and that will lead to a decrease of some EUR 450 million-EUR 500 million on the balance sheet total number. Cash incoming in the final quarter out of the sale of these projects. A part of them has already been sold in October now. We have no impact coming in from the Emerald transaction that I could say on the 2020 numbers. Klaus will come back to this issue, and therefore I will not talk about it now. The most important change that we have is the reduction in work in process combined with the cash in for year-end.
I think that's all that was being mentioned now for nine months period. More important is the outlook and the comment on the Emerald transaction from Klaus. Therefore, I hand over back to him.
Thank you, Andreas. We come to the operational outlook. As always, we don't give you a guidance in figures, I try to describe a little bit the expectation for 2020. First of all, turning page 30. Here you see a summary of the energy segment, what we are going to expect. The renewable energy is anticipating a very positive again. It's over the last 10 years, more or less always the same story. I think we have a chance to be on the same level as last year, from the EBIT point of view, maybe even a little bit better. The conventional sector is already better than last year. I think the figures we have seen just a few minutes ago, they will lead to a very positive result in the conventional energy again. One comment on our big project regarding renewable energy.
I know some of you are a little bit questioning what we are doing. Some are impatient. Some have doubts whether we can accomplish anything here. Due to the corona crisis, of course, it was not easy over the year to have all these necessary due diligence processes and support. Of course, because people could not travel, they couldn't visit us. To make a capital increase of more than EUR 500 million just on the phone is a little bit complicated. You wouldn't get money from me, for instance, personally. So far it took a little bit longer as we thought. This is an unpleasant situation, but was not caused by the management. Well, I would say be a little bit patient and maybe we will have a final conclusion and solution over the next weeks.
We are coming back and I'm going to announce here already, if we are through the process and we have something to announce, that we offer to you also a special analyst conference via phone and then I would like to explain, or we would like to explain to you, what we expect or what's going to happen. With other words, the process is not over. We turn to page 31. As Andreas said, we expect a higher result in comparison to 2019. The corona crisis damaged a little bit our fertilizer business, but it is going to be overcompensated by the machinery business, Global Produce, and our international commodity trading and specialty business. Agriculture is also positive. Building material has a great year already.
Also the last, depends a little bit on the weather as always, of course, but are anticipating a much better earning and further earning increase for the last quarter. The overall picture is that we believe that 2020 is a very good year for BayWa really better than last year and the years before. Thank you. What would I bring up? I hand over to Josko.
Okay. Thank you very much, Professor Lutz and Helber, for guiding us through the presentation. Now your time to ask question, before we start with the question, I would like to congratulate you for the anniversary. Well done today in 32 minutes. That's pretty quick. More time for start.
I expect some gifts here.
Don't be too reluctant. Ask him all.
Be brutal. Hello?
Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone pad. If you are using a speakerphone, please make sure your mute function is turned off to allow you to reach our equipment. Once again, please press star one to ask a question. We will take our first question from Roland Pfänder. Your line is open. Please go ahead.
Yes, good morning. I would have two questions on the renewable energy segment. Firstly, interest rates in the market, be it Europe or U.S., declined further. Do you experience any impact on demand pricing, project value, your rights you hold on the balance sheet? Secondly, are there any project delays that you could highlight, which might happen this year and might be postponed, and would it be of significance? Thank you.
Okay, thank you. First of all, we have no decline regard the value in the United States and other areas, and our international business is absolutely in a good shape. The margins are much better. This is the reason why we expect, in the last quarter, a very positive development on the bottom line, but we have some delays, Andreas.
Mr. Pfänder, thank you. On this issue, talking about the interest rate and the market conditions, have that impacted the pricing of the project or things like that? I think one might say that we have seen a couple of delays in project, we'll sweep over from 2020 and 2021. We announced in the beginning of the year that we expect to 1.2 GW to be sold. The latest forecast is that we are coming out with 880 or 900 MW, it's slightly below that number. The good thing is that we compensate this delay due to higher margin that we have experienced in those projects being sold or are being to be sold in 2020. This is Malaysia and this is Japan firsthand.
That's what Klaus mentioned, with margin improvements that will overcompensate the project delays in two projects, actually, in the U.S. Wind project that will only be executed or has been sold at the beginning of 2021.
It's important to say that the projects are not jeopardized.
Yes.
It's just a timing issue. Overcompensation is also caused by the solar module trading facility. Insofar, well, as I said, the outlook is very positive.
Maybe if I may just add one comment on the reasons for the delay. It's nothing to do, as Klaus mentioned, with our performance or with the performance of our subcontractors. It's mainly because of the workload of the authorities which are needed to take up these projects. They are also affected by corona. You might imagine it in the rest of California or the rest of the U.S. This causes mainly the delays in the U.S. project. It's nothing to do with performance on our side or with subcontractors or wind turbines or things like that.
Maybe it's worth also mentioning, compared to other project development companies, we don't have a problem with the acceptance declaration. It's just the reason for this delay, as Andreas correctly said, of course, the permissions and also all the necessary work to be done by official authorities. I know that other companies have a problem with the acceptance declaration legally because they can't send the teams to the project locations to go through this process. Now, this is not the case here because we have the teams in the countries. The project development itself is not at all a problem.
Maybe a follow-up. Would you expect to keep these margins maybe into next year, or is it really depending always on the contract situation at the point of signing?
Well. Hmm?
No, please. Mr. Radeljic has the answer, so he has to work as well. Come on. Show what you know.
Yes, Mr. Pfänder, I do believe in some regions, like in Asia, we will keep the high margins. In Europe, rather unlikely. That's over now. That's my answer.
Yes, it is the answer. Quick, short.
Quick, short, to the point.
Precise. Yeah.
Here you see the leadership in this company is unbelievable.
Okay.
Was the answer okay for you? Good.
Yes, sure. Thank you.
Next question, please.
Our next question comes from the line of Anne Margaret Crow. Your line is open. Please go ahead.
Good morning, gentlemen. Congratulations on the, I guess it's a golden presentation, if it's the 50th.
Oh, thank you very much. Lovely to hear you.
Well, thank you. I'm delighted to be here this morning. I've got a couple of questions. The first one is the overall cost of restructuring in the agricultural business, to give some idea of the scale of that. The cost within the first nine months of the year. Also, some indication of when this program of restructuring is going to be complete? The second question is, in the renewables business, you say there's the benefit from sales of photovoltaic components. If you could give some idea of the percentage of EBIT that's attributable, just roughly, to that activity? The third question, you mentioned that you expected to see the first sales of residential units, I think in the fourth quarter of this year.
There was an analogous program in agriculture with greenhouses in Saudi Arabia, and I was wondering if you could provide an update on that program as well.
It's really hard work now. Unbelievable. A lot of questions. Thank you for that. The restructuring process in our agribusiness is over. That's our internal project view. Also, the timing for the local management is two years. 2020, we started with a much more straightforward approach, 2021 and then 2022. End of 2022, we expect that we are, especially in Germany, back on a profit level. This is very important to understand, I do not believe that we are coming back to the profit levels we have seen 10 years or eight years ago. This has to do with the consolidation. The farms are going to become much bigger. We expect some changes in the subsidy structure from the European Union and, well, the margins are under pressure and the uncertainty in the agri sector. The farmers are investing in machinery and technology.
The rest is a big question mark at this point in time. It's very hard to say what is a reasonable profit level in the future. The expectation is over the next two years. With regard to the restructuring costs, Andreas, what is the right figure?
Yeah. We already included in the nine-month number, EUR 1.6 million so far. That will be in the fuller year-end, around EUR 6 million, and we expect another EUR 6 million - EUR 7 million coming next year. This will be the overall short-term or for the next two years, cost of restructuring in this respect.
Maybe that they have a feeling, what are we doing in this restructuring process? We are reducing our sites and branches in Eastern Germany from 43 branches. We closed 19 and in Germany we are closing a lot of branches. The expectation is that all over Germany we will be covered by round about 80 to 90 sites and branches of BayWa r.e. This is only the local business. That's one thing. The other question you had is the percentage of the solar trading, module trading, and the component trading in the overall profit. Normally, we don't talk about product lines and the profitability, but in this case, because you were so charming this morning, I make an exception.
What is the percentage?
15%-20% of the overall profit, the EBIT profit. Let me say 15%, 20%. If I don't know exactly the figure, I take always the middle. Around about 17%-18%.
Okay. Is that for renewables or the whole of the energy segment?
No, that is only renewable. Renewable energy. BayWa r.e. GmbH. The question regarding the project business in building material. The contribution will be around about EUR 2 million-EUR 2.5 million this year. We expect over the next year exponential increase of profitability due to the projects we have in the pipeline. The last question. Al Ain, we have one of our big talents down in the Emirates, who is taking care, together with a new team, of our greenhouse project. As you know, in the beginning of 2020, we had this flood catastrophe in the Emirates, which was really unusual, that in the desert you have such a climate event. Our greenhouse was nearly completely destroyed. Now we are back on track. We are refurbishing, rebuilding our greenhouse. The insurance companies took over the bottom line, so to say.
With other words, we expect a profit contribution from Al Ain. We are in, let me say, full operation mode back in 2021. The expectation is first quarter. I think it's more end of first quarter 2021 due to the corona crisis and all these quarantine regulations in the Emirates. It's very complicated, and you can't just travel to Al Ain. You need two to four weeks till you are at the ground of our facility over there. It takes time, but I'm very positive. The market demand is increasing. We have our partner, Al Dahra. Maybe you have heard that Al Dahra sold around about 50% of the shares to the state-owned agri investment funds.
Right. Okay. That's really helpful. Thank you very much.
My pleasure.
We'll take our next question from the line of Heinz Müller. Your line is open. Please go ahead.
Yeah, good morning. Heinz Müller speaking, Kalliwoda Research. Also, congratulations regarding your very good figures. I would like to raise three questions. The first is, how do you assess the new proposals regarding the CAP with less direct payments in the first pillar and perhaps the impact on your agricultural business? The second question is, due to the more restrictive legislation, especially in Germany, regarding animal welfare, do you expect a structural change of animal husbandry and in consequence, negative impacts on your feed business, perhaps a declining soy business? Perhaps the third question, what are your expectations regarding ag PV? Thank you.
Ag PV? Agriculture PV? Heinz Müller, good morning. Nice to hear you. I hope you are doing fine. First question, first pillar change in the European agri policy. I think more important is the uncertainty among the farmers and the whole industry, what is going to happen over the next years. I expect more greenery, more sustainability demands from the European Union regarding the farmers. The second question you have asked concerning the animal welfare is, so to say, part of it. We expect a negative impact on the input resources business, which we are faced already in this year. I do not see a significant increase of profitability, and you are absolutely right, and this has to do with the change in the policy, but also this uncertainty among the farmers. What is going to be very important for the farmers?
They need to have a very good digitalization process. They need to get all these smart farming software packages, to improve the processes and also to improve the output with less chemistry on the soil. This has to do also with the subsidy structure in the future, and so far it's going to affect us. The second point is, it's not only to do with the subsidies, that some chemical crop protection remedies are not anymore either allowed or maybe they will be forbidden in the future, and this will have an impact as well. This is one reason why we are going through this very tough restructuring process at this point in time. The animal welfare and all these scandals and discussions and prejudices and misunderstandings and so forth, we expect, of course, that this is going to affect the livestock development here in Central Europe.
It's not only Germany. I think that the production is going to be moved more and more to Eastern Europe and to Asia. We see, for instance, that the demand for soy as an important part for the development of compound feed products, is really dramatically increasing in China. China tries to become more and more independent on the compound feed production, but also the livestock. They want to be more and more self-sufficient, and that's, of course, affecting our business. This was the reason why we started a specialty program, specialty product strategy in BAST and Cefetra, because we see a decline of opportunities in the normal commodity trading for the compound feed industry. Here we are in Europe, number one, so we have to change a little bit the product mix, and we did that already successfully. Is this the answer?
Do you have further question, Mr. Müller?
The expectations regarding your agricultural PV business.
Agricultural PV. Yeah, I understand.
Photovoltaic.
I understand. That's just, we had this agri insight. I know.
Yeah.
You're referring on this. Well, this is a niche market at this point in time. In Germany, for instance, you don't get subsidies in the so-called EEG, the legislation you need, or we have here, for photovoltaic, because the double function of acres for photovoltaic on the one side and agriculture on the other side is not subsidized. It is punished still. This needs to be changed. We are part of some legal and legislation initiatives in Berlin, because in other countries, this is already a very successful program for farmers to have a second revenue stream. I'm very positive. We have some projects in the Netherlands. Big figures at this point in time to announce is really too early.
Okay. Thank you.
Thanks.
Our next question comes from the line of Knud Hinkel. Your line is open. Please go ahead.
Good morning. Congratulations also from my side for good numbers and for the personal anniversary, Mr. Lutz. My questions, I have four. First of all, on renewable energy. Just to confirm, you said there are some project delays. This means that these project delays will all occur in Q4 because Q3, until Q3, everything looked great. That is my first question. Second question is on conventional energy. Looking at your guidance, it seems extremely cautious that you guide for increasing earnings if the Tessol result last year is stripped out. What's the reason for that? Do you expect the business to fall off a cliff in Q4, or is it just normal cautiousness? Thirdly, on FX and Latin America. FX has been very weak during the year. Does it affect any of your businesses? Does it affect any of your customers?
Is there something you can report on that? That would be my three questions.
Thanks for the congratulations, and Andreas is answering the currency issue, please.
If I should start, if I got the question right, I don't know if I really understood it right. It was about the South American currency.
Latin America.
Latin America. That does not affect our business as far as I know from Peru. This is a very small business, though any impact that it should have should come in the T&G results in New Zealand, but it's not been reported that it should be an issue. A currency issue that we currently have is the EUR 7 million impact, which is accounted for in other activities, but that relates to the dollar development in our projects. That will, as I mentioned before, turn out when we sell the project. Nothing on the Latin America thing.
Okay. Good.
Yep.
Conventional energy. I think that the year 2020 is really exceptional. I don't expect that we repeat on the basis of the structure in which we are right now without Tessol, that we are going to reach a similar result in 2021 again. Maybe it's not so bad as we expected after the sale of Tessol, but it will be better, but not this high level we have right now. Of course, we are always cautious. Q4, well, we have now, what was the result, was EUR 26 million or something.
Right.
What maybe it's worthwhile to be mentioned. We founded a subsidiary for LNG, and for other mobility business, small business models, and this is already successful and positive. Bottom line, I think the contribution is EUR 1.5 million at this point in time. The electric stations for e-cars and all this stuff where we are investing really, and where we are also in the consultancy business and where we have a lot of new business models. I think this is going to support the conventional energy sector in the future. Q4, I'm careful. Bottom line, it will be an excellent year. To be repeated, question mark. I don't know at this point in time. To renewable energy. Did I? Yeah. Andreas?
Should I?
Yeah.
Dr. Hinkel, you asked about the project delays. If they come in the final quarter. Actually, yes, that has been planned. It's related to two projects in the U.S. I mentioned that. The one is the wind project, 200 MW Amazon. The other one is a solar project. I don't know if you got the name right, Corazon Solar Project. It's a solar project also in a range of 200 MW. That has been the deviation from the 880 that I mentioned to the 1.2 GW. But once again, that will not be seen in the profitability. This has been overcompensated by higher margins in the project that we realized or that we will realize on other parts in the world in Q4. Maybe one word on the classical, on the conventional energy. It's really surprisingly good development after nine months.
Just keep in mind, we have the EUR 26 million now compared to the EUR 21 million last year, but these EUR 21 million last year included roughly EUR 9 million on profit contribution from Tessol. The performance, not only from new businesses, but also the performance overall in Austria internally from the heat business, from the fuel business, has been extremely strong. As I mentioned before, the quality of earnings is different.
I'm still struggling with your guidance. If you say, okay, Q4, there will be project delays, profitability will be higher. Still you expect the result at 2019 level. This means that the higher margins will not compensate for the project delay to full extent in Q4.
Even more, because we have a chance. I can't make a commitment at this point in time, but we have even a chance to be better than last year, first thing. Secondly, don't forget the other activities which we have, especially our trading activity.
Once again, to make it very clear, the solar trade business, the components business, has been much stronger than expected. The margin of some projects, I mentioned that the project in Japan and Malaysia, the margin has been incredibly high compared to what we expected. Given what we said last year, we expect, and Klaus mentioned it, a similar result than we had last year. You can see that we compensated the delay of these two projects.
To be honest, there's also another answer on the question. Of course, we say corona is the reason why we are postponing and we have a delay here. Maybe the picture is a little bit mixed. In previous years, we decided whether we are going to sell all the projects, yes or no, or we are going to do that the next upcoming fiscal year to have a sustainable profit development for us and for the capital market, because this was a commitment from my side as we invested in this business segment, that we are sustainable from the profitability point of view. You have to take into consideration, and this is very important what I'm saying now. You have to take into consideration that our project management, engineering, and development resources are globally limited.
We have 2,500 people, soon nearly 3,000 employees in this business segment, coming from 25, by the way, a few years ago. We can't handle all projects at the same time. This was in the past also the reason why we postponed projects to the next fiscal year. We shouldn't make one mistake that we say, okay, it's 900 MW which we are selling in 2020. The expectation was 1.2 GW. We have a gap of 200 MW, 300 MW, and we add that on 2021 because the bottleneck is the available staffs to handle all these projects. Now we have more than 13 GW in the pipeline at this point in time. This is also one of the key assets for a potential investor now with regard to the equity increase which we are going through. So far I'm completely relaxed.
Okay, understood. Thanks.
We'll take our last question from Dr. Norbert Kalliwoda. Your line is open. Please go ahead.
Yeah, thank you. Good morning, sirs. Congrats to your nice figures. Very good. I have some questions. First is, just short, the solar modules you are getting from China, what's about the price development there? Also, congrats to your precision farming, and I see on your website you have an aCar robot. Smart farming is a big issue in your company. Maybe you can give some insights how the farmers are willing to spend. Is it increasing or so? Last but not least, you mentioned the Netherlands is very strong in regards of solar energy. You had lots of megawatts, and you still have it, I think, and you wanted to increase this. Can you give us some more insight, please? Thank you so much.
Thank you. Thanks for the compliment and congrats. Like to hear that, of course, because there are some years where you have a different approach. I don't mean you in general remark you. Coming to the Netherlands. Start with the last question. When was it? Two years ago, we made this big acquisition, GroenLeven, in the Netherlands, because the Netherlands had to catch up with renewable energy due to the gas contract they had and the legislation for the gas supply in Holland. This has been canceled. Now the RE, the renewable energy sector, is very significant for the energy supply in the future, also due to some sustainability and legislation acts of the government and the parliament in Holland. Well, we are insofar, we are market leader in the Netherlands. We have this floating solar park projects developed.
This is on the basis of the knowledge of our and developments of our engineering in renewable. Well, we acquired around about 1.5 GW to 2 GW through this acquisition two years ago, and now we go through the process to realize all these solar projects. More figures I don't have available at this point in time. The smart farming business, indeed, this is going to be more and more important for us. As you can see, it's still negative due to the investments, and farmers are still reluctant to invest in this digital farming process. Nevertheless, they have to, due to the changes in the subsidies, as I said, and also due to the competitiveness of the European Union. It's a European issue, not a German challenge. The competitiveness is very weak in comparison to the international agribusiness.
If you want to export, you need to be really more than competitive, and therefore you need technology, you need smart farming, precision farming. The people are still hesitating, unfortunately. I'm convinced due to the change in the generation on the farms, this generation change, that the younger farmers are more willing to invest in this. Of course, we have these robots. We have harvest robot in New Zealand coming from our joint venture with Google in Silicon Valley, Abundant Robotics. We have two prototypes. Last year, we had some interesting experiences with these robots. Unfortunately, this year was not possible because we couldn't ship the robots from the U.S. to New Zealand due to the corona crisis. We have some burden here as well. I think the future is smart farming. I said it always, by the way. It's not a revolution.
It's an evolutionary process. That's the big difference to other industries where digitalization is absolutely key. This is not yet the case here in this very conservative customer base in farming. The question regarding the solar modules coming from China. Well, we have some frame contracts, not only with Chinese suppliers, but also in South Korea, in the United States. In the U.S., because you need to use the manufacturer in the United States due to the regulations of the U.S. government under Trump. By the way, I don't expect a big change here after the presidential election. With regard to the prices, Andreas, do we have something where we can explain a little bit? It's not an issue for us. The profitability, as we said, the margins are high, and I don't see. Huh?
Dr. Kalliwoda, I get back to you.
If you need figures, [Mr. Jochum] or [Mr. Rathgeb].
Great. Yes. Thank you.
Okay.
Yeah. Thank you. Thanks a lot.
Maybe, Dr. Kalliwoda, the question that has not been really on the table, but as Klaus just mentioned, they just brought us into slides from the impact. They had a meeting yesterday with our U.S. business, with the impacts of the result of the U.S. election, which might come, Biden as president, and then the different options that we have, the Senate being dominated by the Democratic Party or the situation as we had it in the past, the Republicans in the Senate and the House of the Democrats. What would that mean? I think overall, and quite interesting also for our U.S. business is that in both scenarios, Biden, of course, it's an advantage for our Renewable Energy business. You probably have heard the announcement that Biden made before the election regarding the Renewable Energy business that he will strongly support.
Both, whatever that means, if we do not have to see another Trump in the House, then with Biden as president, that would be probably very favorable for our renewable business in the U.S. as for the renewable business in the States as well.
Thank you. Speakers, we have a follow-up question. Would you like to take this?
Yeah. Klaus?
Yes.
Yep. We have Mr. Müller again on the line. Please go ahead.
Yeah. Thank you for taking my additional questions. The first question is, do you think there could be a serious danger for the traditional ag trading business by trading platforms, which are establishing now? Perhaps you have in mind the acquisition of a startup. The second question is, do you think that you can again increase the dividends due to these excellent figures? Thank you.
Okay. We start with the second question. Of course, we can't make any commitment at this point in time. The management, the board, Andreas and myself, and of course, we need the approval of the supervisory board, and finally, the AGM has to take this decision. Due to the structure of our shareholders, I think I don't make a too big mistake to say that we could imagine that one euro is a nice euro. Do you understand what I mean?
Okay.
That, Mr. Müller, as one euro can be possible. It depends on especially the performance of the renewable energy. Coming with the figures we believe in will mean that we increase the dividends. This is a pre-announcement without being an announcement. This is legally possible what I'm doing here. They put me in jail, Mr. Müller, you visit me as it is. The first question with regard to the platform, whether it's really a danger, it's more or less the same argumentation with regard to the digital farming process because the people are reluctant, the farmers are reluctant. The platform, we initiated one together with some partners and we opened it, but it's not yet, let me say, Amazon 2 or something like that, or Alibaba. It's a niche market. Of course, it will play a role in the future.
Whether it's significant or not depends on the behavior of the markets of participants. We need not to buy something because we are in this business already. I forgot the name of the platform. What was the name? Do you know this? It's a joint venture with this university. Huh?
Unamera.
Unamera. This is our CFO. It's all in his mind. Unamera. That's where we are co-shareholder and we are in the, let me say, training process and, well, we will see. We are in the business as always. BayWa is always working innovation, of course.
Other partners join it now.
Partner are going to join. More and more partners are joining this platform because if you do it just alone, then you can't be profitable. This doesn't make sense at all.
Okay. Thank you very much.
We have no further question. Please go ahead for any additional closing remarks.
If there are no further question, I would like to thank you for your interest and participation. Our next official conference will take place on the 26th of March. However, I have the feeling that eventually we will have an extraordinary telecall. Let's see. Until then, stay healthy and talk to you soon. Bye-bye.
That concludes today's conference call. Thank you everyone for your participation. You may now disconnect.