Good morning, everybody, and welcome to Baibars' conference call on the results of the Q3 Figures 2019. Next to me is the thing Professor Harald Joseph Flutz, our CEO and Antwela Selber, our CFO, who will guide you through the presentation and take the question at the end of the presentation. All relevant documents have been sent out this morning. Otherwise, you can download it also from the Investor Relations website. And I hand over now to Professor Lutz.
Good morning, everyone, on the phone. Thanks for joining us for our analyst conference and the communication and key messages with regard to the Q3 2019. The main messages and key messages first maybe, and you can follow on Page 4 of the presentation, revenues and earnings up year on year after the Q3. Improved earnings in all three core business segments, and we confirm a significant increase for 2019 annual result. Looking to the slight increase on the revenue side, the 2.3%.
This is caused by our conventional or basic energy business due to high volumes in the heating oil. And we are also in a very, very good shape with regard to our fuel stations. The profit increase more than 100 percent from €28,300,000 to 70 €7,300,000 on EBIT level has to do with a better performance of renewable energy around about SEK 23,000,000 Nevertheless, they just are on a breakeven level because we expect the revenue and, of course, especially the project earnings in the last quarter and again as last year. It's a similar situation in the last weeks, but we are not depending on one big project. We have several in the pipeline, which we are going to sell.
So very good performance in the 1st 9 months now. And you can compare the quarterly performance on Page 5 with the last year. Interesting, last year was a weak Q3 with minus 3.8 percent, now €25,000,000 euros Q3 2017 was also not so good, but 2016 and 2015, the higher EBIT had to do with the sale of some renewable energy projects. The comparison on Page 6 and the development of the group and the comparison of EBIT over the last years, I would say we are better than the previous years because we do not have yet sold too many projects. Coming to the agriculture segment.
On Page 8, you have an overhaul of our agriculture market development on a global basis. So the agri commodity prices are not very volatile at this point in time, which means that the sideways movement does not really create upside opportunities for profits. So we depend very much on the functional margin with regard to our supply chain management, especially with fiberglass supply and trade. The world grain balance, not a significant change to our last analyst conference. So the production, the expected world grain harvest in 2019, 2020, the season in which we are right now and the consumption are more or less in a parallel or similar situation.
In other words, we do not expect a higher volatility and especially if not unreal upside in the commodity prices over the next months. Coming to Page 9, you see a decrease in the EBIT profit from CHF 23,000,000 to CHF 10,600,000 and also decrease in the revenue. The reason for that is pretty simple. We are reducing the volumes traded in the commodity business due to the little opportunity to make profits and the EUR 10,600,000 are the result of our specialty strategy. We acquired over the last year some new companies in niche markets, specialty markets like organic, organic supply for the compound feed industry.
And so far, our strategy to change the volume very much volume driven commodity trading activities and supply chain activities more to specialty trading and specialty activities. This move was absolutely right. We are not at the end of the story here because we are in the process to acquire some further little companies with regard to special products. Coming to Page 10, the overall market development and the input resources, This is very complicated, especially in Germany, has to do with the image of the agriculture business and also some regulation impacts from the European Union with regard to crop protection and to fertilizers. And so far, we are here in the local market in Germany and in Austria a little bit under pressure.
The global produce business development this year is much better than last year. Nevertheless, we have still some hurdles in the United States. The harvest from Washington State, which is foreseen to be exported to China, will not be possible due to the trade war. And the volume and the size of especially the airports from New Zealand was not very much in line with our expectation. Nevertheless, we expect a very good harvest in Germany this year.
And at the end of the year, you will see that fiber will show an excellent performance in the global produce business coming to that a little bit later. Agriculture equipment, maybe some of you will be surprised that new registrations of tractors in Germany are up of 15.5%. This is not the case in Eastern Germany and Northern Germany. This has to do with the highly fragmented markets in the southern part of Germany, and the trend is still on track. And so far, we expect also here a very good 2019, not on the highest level we ever had.
2018, a little bit lower, but nevertheless, it will be a great performance. Coming to Page 11. Here, you see our agri trade and service business, which is the input business, the local origination, the supply chain management and the trade of the key commodities in Germany and in Austria, we are in a much better shape than last year. The revenue was up 5 0.2 percent to $2,700,000,000 and $10,500,000 EBIT. This is the increase in revenue is volume driven, of course.
And we had a better start in the sale and trading of our agri commodities in Germany compared to 2018. Coming to Page 12, here you see a significant increase The profit in our Global Produce business, revenue is more or less flat. The profit is CHF 13,200,000. The reason for that is a much better operational business and some one timers, especially the optimization of our portfolio in New Zealand, which is an amount of €10,000,000 roundabout. Also, Al Dhaka Baibor, our joint venture is in a good more and more, let's say, in a good market position in the United Arab Emirates.
The supermarkets are demanding the premium tomatoes, which we are producing. And next year, I guess, in the full swing of this business model, we are profitable. So we come to Page 13. The equipment business, as I said, it's still very, very positive. We are on the right path.
Increase on revenue of 3.4 percent to €1,200,000,000 and profit €14,500,000 It's slightly lower year to year comparison due to some delay effects, especially in Eastern Germany. The order book is completely full. So if our manufacturer, the glass company, is able to deliver the tractors, harvesters and other products, we are positive that we catch up a little bit. Interesting enough is also that we have a much greater demand from our non agriculture customers, especially local authorities, cities, villages and so forth, for tractors, especially small tractors or the airports are asking more and more for tractors. And so fiber has a good market position in this segment.
Page 14, that's the summary of the Financial Agriculture segment, the income statement, the P and L statement. Andreas is going to comment that a little bit later. Let's come to the Energy segment. Excellent performance. Also, we did not yet sell most of our planned 6 60 megawatts in the Renewable Energy business.
Here you see on Page 16 some information with regard to the market development on the left side. No change. Solar is going to be more and more the most important pillar. Wind, of course, stable also plus or 14% on a year to year basis. And very important message with regard to the solar module trading and service business in Germany here, we went through a very complicated and difficult period over the last years.
Now we are back on track very profitable. The conventional business is due to high volume and a very good business, and the fuel station business is also excellently performing. Maybe a comment to our planned private placement with our Fiber RE. Of course, we are not in a position to go into details at this point in time, but I would like to share with you that we are on track with our plans. And it's very interesting that the demand for participation in Fiber RE, the 40 plus percent, as we told and communicated this information to the capital market, The demand is very high.
A lot of companies, PEs and interested parties are very, very enthusiastic about this approach from Baiva. And I'm very, very, very much convinced that we are in the corridor, which we communicated. As we said, we want to create another €500,000,000 from the Capital Markets, plus the green bond, which was positioned in the market very successfully with another €500,000,000 So at the end of this year or maybe quarter 1, 2020, it depends a little bit on some approvals which we need. If we have a partner agreement signed with a third party, So that means only for renewable energy, EUR 1,000,000,000 from the capital markets. And as I said, and I would like to repeat that there are a lot of interested parties to become a stakeholder and shareholder in VIVA RE.
At the end of the day, of course, we make the choice, and we are in the process internally to evaluate some indications and who is going to be the preferred partner for Baibars to become shareholder in Baibars RE. Okay. So we come to the result in Page 70. Well, I need not to comment that it's too early. It's interesting that we are a little bit better than last year, but the key projects will be sold in Q4.
As I said, the plan we have is to sell 660, roundabout 660 Megawatts in 2019 in comparison to 2018, 450 or 460 megawatts last year. If you turn to Page 18, the Energy segment, the conventional one, it's an excellent performance, more or less higher revenue due to the volumes and the profit, €21,500,000 excellent performance. I explained why. If we come to the financial statement. I do not want to comment on that right now unless it's coming back.
Building material, well, that's in Germany going to be, I guess, a complicated sector because 20 Page 21, you see still some positive figures. The development is on track again in comparison to the last years. It's very good performance. Nevertheless, due to the political discussions with regard to rental fees in Berlin and some other main cities in Germany, it could create some uncertainty on the side of potential investors. At this point in time, we do not see any influence and impact on the P and L development and the order intake for Baeva.
Nevertheless, that's one threat which we are faced with and we have to deal with. And our answers are especially to invest more money in alternative specialties and also more and more in the online business. Page 22, you see the result. It's more or less on the same level as last year. Financial income statement, Andreas, is coming back.
Then our business segments, and there will be a change in the future in the reporting, by the way, Innovation and Digitalization segment, which is especially smart farming, digital farming. We have an investment of CHF 10,200,000 the 1st 9 months. We are expecting now a good performance on the Agri Technical, whereby we're going to present a new product portfolio of our applications in FarmFacts. The preorders are very good. Nevertheless, there's no doubt about it that the digitalization process in Germany in the farmers business is not as fast as we and I expected.
It has to do with the conservatism of our farmers, but more importantly, the infrastructure is not in, let me say, in a state of the art shape. And that's really not only a pity, it's a disgrace for this country. We are working on the internationalization process for PharmFEX. In Germany, we are market leader, as you know. And my goal our goal is to become market leader in Europe with our applications as well.
We start now with the Agri Application Group during the Agri Technikrand, that's a communication software, which is enabling the Agri devices and the machinery to communicate between all the different machines and so forth to share information, to transfer information, and that's pretty new. And we hope that this will become a standard for the farm industry in Europe. Other activities such as the flashlight, minus 27 to minus 30 last year, which then overhead. And this is well, I need not to explain that because the most important explanation will then come with the annual report in March 2020 because it's not yet clear what the outcome will be of some activities which we have in place. So that's the overall.
I would like to repeat now for the 1st 9 months. We are in a very good shape the 1st 9 months. We are on track as planned. And a little bit later, I will comment make some comments on the outlook for 2019 and as far as it is possible also already for 2020. Andreas Helber will explain now the group financials.
And yes? Yes, Claus. Thank you, and good morning to everybody also from my
side. With respect on the P and L and the balance sheet on Page 2829, I will keep it rather short this morning because we are already running through this final quarter, and the final picture at the year end will be completely different to what we see now at the current status. But nevertheless, we are, as Tal said, good on track with respect to the segmental disclosures that we mentioned. Just keep in mind that the improvement year on year is mainly driven to the energy performance, both in the classical and also the renewable energy business within the agriculture segment. We have an improvement on the global produce.
The improvement within the German or the domestic market business is currently set to being set off by the lower volatility on the international trading. But also, we expect catching up effect in both parts of the segment, the domestic market as well as the international trading now in the final quarter. We just got the news coming in that China and the U. S. Now are back on track with the negotiations that all will influence the business and creating mostly high volatility in the business, so that could also be an improvement trigger for the final quarter.
When it comes to the overall to the summary on Page 28, just a few comments on the whole income statement picture. Firstly, the comparison year on year is somewhat affected by the IFRS 16. You probably have seen it with all other companies in your in the portfolio you're looking at. So if you look on the EBITDA improvement, which is rather significant, but it comes out of the operational performance improvement, of course, by some €50,000,000 to €60,000,000 But one effect is mainly due to the getting out of the depreciation effect being offset by the lease expense coming in and then an effect of net €12,000,000 which is now shown in the interest down below the EBIT. So the EBITDA has improved the overall number.
And you see that if it comes to the EBITDA the earnings before tax, which is only CHF 24,000,000 higher than the previous years compared to the CHF 50,000,000 improvement rather EUR 50,000,000 improvement on the EBIT level. So I think this is the only thing that we should keep in mind if we look on the year on year performance, but it's also just a snapshot now after 9 months. And as Thales will mention in his outlook, the improvement year on year at year end for the 12 month period will be significantly higher than we can show it now after 9 months. Page 29. On the balance sheet, once again, also here, we have the IFRS 16 effect, which we have shown through all the quarters in 2019 so far.
And we disclosed the lease effect on our balance sheet, which is shown in the lower part of the schedule with some SEK 750,000,000 in total being higher balance sheet volume now and the other effect from the increase from 7.5 year end to 8.9 after 9 months in 2019 is mainly driven due to the harvest. First hand, all the harvest is mainly in the agriculture segment. Now we're still waiting for the remaining corn coming in, in October. And additionally, we have some EUR 500,000,000 increase on the project levels within the Renewable Energy business to SEK 1,500,000 on inventory so far now at after 3 quarters. And this is expected to be offset by some of some, let's say, EUR 500,000,000, EUR 600,000,000 on projects going out in the final quarter and also delivering not only the cash in and reducing the overall volume on the balance sheet, but also bringing the remaining profit for the year that we expect.
The situation this year is somewhat different to what it was last year. You remember, last year, we always said we are waiting to this huge project on Don Rodrigo in Spain, which was a huge contributor at the final month of 2018 on the renewable energy performance this year. We also expecting it coming in the month of November December, but it's not only one project. It's currently 8, 9 bigger projects, but smaller than the Don Rodrigo with 175 megawatts that it was last year. So it's mostly the same story, but with a different project mix within the solar and wind business.
I think that should be it for the on the group financials. The most important, I guess, is the outlook and kind of forecast. I'm not we're not giving you guidance, as you know that, but Claus will probably estimate a little bit on the outlook for the full year, which is the most interesting thing for you guys. Thank you.
Thanks, Andreas. So outlook, as I said last time, I do not want to provide you anymore as long as I'm in charge here as CEO with the guidance as we did it last year because this is creating artificial pressure, which is nonsense the commodity business. And people who are expecting a clear guidance, which means a figure do not really understand our business here. So what is the outlook? Well as planned, Fiverr will finish 2019 with a significantly higher earnings than in 2018.
What significantly means, it's up to you to calculate. I think that the agri and the service Agri business, the machinery business and agriculture segment, well, especially in the commodity business, as I said, the markets are still challenging, and there will no we will not see any change with a significant upside potential. Nevertheless, I guess that we have a high market potential due to our higher grain inventories. And we believe that there will be a little recovery in the demand for agriculture inputs due to the delayed autumn seed sowing. So we will see a little catch up there.
Then agriculture equipment, as I said, will have a very strong final quarter. If the manufacturers are able to deliver the devices, global produce, good harvest to be expected in Europe. And so far, the marketing activities and opportunities will be positive. The flood of apples coming from Poland is more or less over because Poland is able to export apples to Asia, which we can't do, especially not in China. And TNG, the performance also due to some one timers will be excellent.
And so far, we expect a very, very high or much higher profit than last year. Building material is stable. We will have a good start of the Q4. Then it depends a little bit on the weather situation. If winter starts late, it's good for the building material business.
If winter starts early, it's good for the conventional energy business. So make the choice what you prefer. The energy sector will provide this year really, again, the record of profit, especially our trends from the Renewable Energy sector. And as I said, we expect to sell more than 6 16 megawatts internationally, globally. Of course, that's our most developed international business besides the global produce.
So at the end, as I said, significantly higher earnings than in 2018. So that's from my side.
Would be happy to take your questions and opening the Q and A session now.
Thank you. And we'll now take our first question from Oliver Schwarz from Viroc. Please go ahead. Your line is open.
Thank you, gentlemen, for taking my questions. I will restrict myself to 3 for the first go. Construction, you stated in your presentation that revenues in the construction industry is up by 10.3%. Bivas Construction Materials segment, if my math is correct, has a number of minus 1.3 percent for the 1st 9 months here. How do you explain that, so let's say, a significant difference between those two figures?
Why is Baiva not growing in line with the construction industry when it comes to building materials? That would be my first question. 2nd question, observation might be a problem of the snapshot effect you alluded to. But it seems like pension provisions hardly budged over the last 9 months, neither quarter on quarter in the Q1 nor in the second nor in the third quarter. However, interest rates moved up and down, mostly down.
However, but those pension provisions don't reflect those effects. What's behind that one? And my third question, mostly similar to the second one, if you might want to. You recall, obviously, huge swings in EBIT, EBT, net income, but the share of minorities is mostly unchanged. What's the reason for that?
Thank you very much.
Yes, Schwarz. Good morning, Claus Lutz. First question, building material, you're absolutely right. Was the test question whether you are following what you are saying or what I'm saying. No, it's a joke.
Of course, 10% up. That's right. But the consolidation in the Building Materials segment in our reporting is not only Germany, it's Austria and some CE states where we have a busy material franchise partners. And the gap is coming from Austria. So what we did not achieve over the last 3 months in Austria is a catching up impact on the P and L statement for building material.
And to be honest, I don't expect it. And so far, I see a flat development in comparison to 2018 in the EBIT. Germany is in a very good shape still, and Austria is a little bit under pressure.
Sorry. Yes, of course. May
I ask
if Germany is up by 10%? Or is that not to the Yes.
We are. We are absolutely in line with the market development. And due to some own developed products, profitability or the margin development is also positive. But we have to compensate Austrian and the increase of our labor agreement with the Werther Union in Germany. Very clear.
Thank you.
And this is Fahad's question on pension provisions. That's very simple. The pension provision will be only adjusted at year end. For the interest change, we have seen the interest coming down to 0.9%. It is it was 1.9%.
In the current provision from last year, that was up, I guess, from 1.75% to 1.9% year on year, 2017 to 2018, then it was 1.9% in 2018. It came down to 0.9%, so 1% over the year. This is the movement that we see mostly every year when it goes through the year. It's now up again at 1.15%. That was the latest estimate at the end of October.
So we are not adjusting it on month on every month. It's only be done at the year end. You know that the change in provision will not have an effect on the P and L. It goes directly into the or against the equity. One could say.
And just to give you a rough estimate, a change of 1% or I mean 100 basis points on the interest rate would mean a change of equity of around EUR 30,000,000. So this is the estimate which could be made. What we expect is through the month of November December, as we saw it all the years before, a slightly increase of interest rates again from this 1.1% that it is now to 1.2%, maybe even 1.25%, whatever we best guess. So at least, let's say, half or fifty basis points might be expected as change of interest rate on the pension provision that would then result in a change or let's say a reduction of equity of €15,000,000 Okay, on that?
Yes, absolutely. Thank
you. And the share of minorities that you mentioned, the minority is quite the same. It's mostly driven by the result of our Austrian friends where we have only 50% in. They are performing better year on year on the agribusinesses and then the other part mostly stable. And the second thing is the improvement of the TNG result that's also contributing with 25% into the minorities.
So this is mainly the part the reason for keeping it mostly stable year on year?
Sorry, I think I didn't make myself clear. I was not alluding to the share of minorities that you receive, but to the share of minority shareholders in Baibars assets that lead to a cash outflow to minority shareholders that which was mostly stable?
Cash outflow?
Yes. Well, the net result, obviously, part of that is recognized as going to Baibars shareholders and part of that is to minority shareholders in Baibars assets, right?
You're reflecting you're now reflecting on the P and L statement?
Yes, absolutely. The very last line basically.
Yes. We have the result or the net result of minus 1.5 percent, and this is coming of a plus of 18.9% from the minority shareholders.
This
is mostly the 50% shares of the good results from Austria and the 25% from T and G. And within the parent company's part, this is mostly reflected by the minus on net result within the Renewable Energy business, which is still expected to come.
Okay. Yes, but I was just puzzled because basically your EBIT, your net income was fluctuating obviously in net income and EBIT has improved materially. But the share of the minority shareholders in those operations don't seem to move much. That's basically what was I was wondering about basically.
Yes. But it's I mean, I would guess it's just the picture after the 9 months that will change when it comes to the full year period.
Okay. Thank you very much.
We will now take our next question from Heinz Muller from Doctor.
Kalevoda Research. Yes. Good morning. Heinz Muller, Kalevoda Research. I would like to raise 3 questions.
You mentioned you will attend the trade fair, Akriteshnikar, next week. So do you hope to improve your business, especially with regard to the Innovation and Digitalization segment? And the second question is regarding your photovoltaic components business, which developed very well. So perhaps you could give us an outlook for the next year. And the third question is decisions of the government regarding the climate pact are not very positive for heating oil.
So how do you think it will influence your business? Thank you. Doctor. Miller, thank you. First question, Agil Technica.
Well, I don't think that we will be on the same profit level with our machinery business in 2019 to 2018. We will have a gap of a few 1,000,000. Clear figure I can't provide you. Secondly, the expectation for the Agri Technical is that our new product portfolio, the applications, cloud based, are finalized by FarmFacts that we are able to sell more licenses. And especially that my hope is that the perception of the markets, the agri market, not only in Germany, but in Europe for this AAG application, this communication software between all the Agri devices and machinery activities will be very, very positive.
That's my expectation. AAG means Agri Application Group, which is a corporation of 6 manufacturers and fiberfarm facts. 2 years ago, we initiated this process with AAG on the AgriTeknica. And now my expectation is that now the performance of the products have been tested by our partners and that this will be the start of a standardization process for the communication software between the different or among the different devices. So that's the key expectation.
I don't see to be realistic, I don't see a significant upside on the revenue and profit level for 2019 now in the Abutechnica. I know sales guys are always telling about big deals and transactions on exhibitions. But in this case, I don't expect much. For me, it's much more important that the market replies positively on our new innovation package and this AAG cooperation. And we are also open for other manufacturers to be part in this cooperation.
And so far, it will be a very positive outcome of the AgriTeknica if some more manufacturers are willing to sign an agreement to be part of this corporation. Because what you need here is market penetration, you need licenses and you need especially a lot of upgrade devices to be to put in a communication mode, which will help us afterwards then to sell applications, for instance, fertilizer application, crop protection or farm management applications to the farmers. So with other words, this AEG group is for us or should be for us the most important distribution in sales channel. 2nd question, outlook for Sola. Yes, over the last years, especially in Germany, we went through a very complicated period with losses, which was not really dramatically due to the overwhelming success of our project business.
Nevertheless, we were we stick to the market, and we made some acquisitions. We are now number 1 in Europe. And we are back on track. And so far as the market circumstances, especially in Germany, have been stabilized and a little bit calmed down, it's not always a discussion about EEGs and tariff and all these things and the changes. And so far, the development was now very positive, and we have a significant profit.
Well, can we make an exception here and to tell the profit just to create some trust on this? Normally, we don't do it.
But what we can say is that the components have increased up to 90% compared to the previous year. And taking into consideration the wind issues and the tender issues in Germany, we do expect also for 2020 a further good development in the demand for solar modules.
So solar modules plus 90% and plus also double digit in 2020 means, of course, an increase in profitability. Nevertheless, the price for modules for hardware, so to say, is always under pressure. The margins are under pressure, and you need to create higher volumes to be, on the profit side, stable or to create a positive more positive profit. So thanks for this, Mr. Radilec.
And the climate activities and actions and laws and so forth, especially in Germany. So we see we, as Pavel, we see much more positive impact on our business as maybe in other industries and other companies. Why? Because we made some changes in the company structure already in 10 years ago as we started with our RE business, which is the most important pillar, meanwhile, for Baivant. And this will be expanded over the next years, again significantly, especially if we have a partner on board.
And with the new financial resources, which will be dedicated completely to RE, I'm very, very positive. I know the business plans and the business plans are conservative. Nevertheless, if you compare it with the overall profit development of Faiva, so our E is going to be much, much more important as it is right now, and it is so important already. And so far, nothing which is negative. Heating oil, you mentioned, of course, that's a point, fair point.
And we are working on 2 sides, so to say. We don't have the new strategy where we can say, well, that's a new strategy now. We put it in place and all is fine. For us, and it's not new, it is clear that we are under cash cow mode and this now for many years. The market is shrinking for many years.
And if we have now this different activities of the federal government as of 2026, we are not at all surprised. And you have 2 opportunities or possibilities. The one is you create joint ventures, you acquire market shares that you improve your cash cow mode. But to acquire market share means without investing money or a lot of money. That's the one thing.
We are discussing that also with potential partners. And the second opportunity is to be in a permanent restructuring mode using the cash flow and the positive profit in our heating oil business to restructure this business segment of Baibars. In reality, we are doing both of them. We are in a permanent restructuring process plus discussions with market participants to combine our businesses to use this opportunity. At the end of the day, we will we have, of course, the need to put a new strategy in place.
The question is only can we do that with a skill profile, which we have right now. And you know, Mr. Miller, I'm very experienced in restructuring businesses. Well, this is not normally not possible. So it has also to do with exchange of skills with regard to PayLab business, for instance, or full service provision to customers with regard to heating systems.
We have a subsidiary, which is called EDL, GMVH. That's a business where the scope is to take care of heating systems in buildings, in households and so forth. So there are some discussions around. We are not through this process. That's not easy.
And on the overall P and L statement of Baibol, I do not expect of the next year's very negative impact due to the heating oil issue, so to say. Is this enough for you? Yes. Okay. Thank you very much.
Our next question comes from Ann Margot Crowe from Edison Investment Research.
Good morning, gentlemen. Thank you for taking my call. I'd like to drill a little deeper into the digitalization business. So it would be good to have a little bit more color on your comment about the infrastructure not being good enough And also a bit more color about internationalization and which markets particularly you were intending to focus on. And it would be really helpful having a view of the fit with the other bits of the agricultural business, given there was a comment about this should help you sell more agricultural inputs?
Okay. So digitalization, I think you mean the FarmFX activities because we have several projects in place. The first one is an internal visualization and optimization and automation process internally in Viva. 2nd is the e commerce process for our customers, which has an internal impact as well. And the third one is farm facts and automations.
Let me comment a little bit on Farmfax. We acquired this company a few years ago for a very cheap price. We developed a complete product portfolio and application portfolio for the farmers. And if I say the infrastructure is not in place, then it's insofar a disgrace as, for instance, mobile telephone or cell phone telephone infrastructure in Germany, you can compare with developing countries. If you, for instance, make a phone call in the middle of nowhere in South Africa, where we have a joint venture with Bolivar, for instance, and it's not a problem to make a phone call to upper Bavaria, for instance, or to U.
K. Or where London, wherever you are located, it's not a problem. But if you are countryside in my home place, for instance, 30 kilometers distance to the headquarters of fiber, then it's very problematic to have a stable line. And of course, as long as this is the case, you have also problems with connection with the connection of devices and with the e procurement because from a logical point of view, you need to combine and to connect the devices plus an automatic procurement system, which means e commerce with Baiva. And as long as the farmers do not have the feeling that this is absolutely secure and stable, they are hesitating to invest money in farm facts or digitalization products and activities.
What they want is consultancy. But in Germany, you don't get for consultancy any money because the farmers are used to be treated and advised by the government and some local authorities. And this is also is normally without any cost. That's a different approach than, for instance, in U. K.
So my demand and in public speeches, I always I'm criticizing our government and the big telephone companies here in Germany that we are not in a position to be really in express. We can't change it. This can't be changed only by the government and some regulations. Nevertheless, we have the portfolio. And on the farm itself, without this connection to buyback, to e procurement and so forth, it's now time to explain to the farmers.
And we use this opportunity now in the Agri Technica that this AEG cooperation is very useful for farmers. The most important questions farmers are always asking is, are the datas really protected? What's about data privacy protection? And of course, it's cloud based. Of course, there are always some there's always some insecurity, which is normal in this type of technology.
No doubt about it, but we do all which is legally state of their art to protect the Tatas and to protect the farmers. Farmers are always concerned that some third parties have access to financial data, especially, And this has to do with trust, trust in our systems, trust in their biotechnology. And I think we have here very good position in comparison to our market competitors in Germany. With regard to the internationalization, I do not mean United States or Asia or so. I think at this point in time, nobody is really waiting for some visualization activities from Baiban over there and overseas.
So with regards to FarmVects, we look for opportunities in U. K, in France. Austria, of course, is home turf and some Eastern European countries, so the CE. But the next step must be U. K.
And France. U. K. Fiber has a very significant and positive market development. And also, our market position in the grain trading, especially, is very good.
And so far, it's obvious that we continue with our internationalization process. And in UK, of course, Brexit creates again some unsecurity, but it's more a local business. And so far, I don't expect some hurdles here. The subject automation is very important. We are a partner of Kugel in abundant robotics.
And the prototypes for the Robota harvester is more or less ready. We used 2 of them in New Zealand during the apple harvest season. And this will also be very important for our future digitalization business because if we are through the process of checking out whether these prototypes are technically state of the art. If you are through this process, I think we have a very good chance to sell those types of operators to either machine and ring, which is an inventory or machinery cooperation in Germany or to also some bigger farmers in Germany and also in other countries. It's completely independent on whether Germany or other countries.
It's an international approach and international business. And you are going to be faced with 1 of these operators 25 workers in the harvest period. And if I say replace, you replace them 20 fourseven. So this will have some significant impact on the structures during the harvest period for the farmers. So that's a little bit the outlook which I see and which we have to underline that with figures is really too early.
I guess that the automation will be a very important aspect for farmers to restructure the farms and to improve the processes on the farms. Otherwise, they are not at all competitive. And the competitiveness of European farmers is complicated enough without any gap. 2020 from the European Commission. It's not easy to survive in the market.
And I think and I expect that through the automation and civilization process, the consolidation of the farmers and especially the small farmers in Europe will be increased rapidly. So is this enough for you? So a little bit about the automation?
That's really helpful about the automation. Just my final question, how it fits in with the rest of the agriculture business?
That's interesting. It's a disruptive approach. And so far, logically, it doesn't really fit in the classical conventional agribusiness because processes will be changed. Logistic and supply chain systems will be radically changed, and we will have a new structure. We are working right now in Baibat to reduce our capital employed and capital invested in the German agribusiness, which is a heavy asset oriented structure in comparison to our international business, which is managed in Rotterdam in the Netherlands, where we have a light asset structure.
And we need to change the heavy asset structure to a light one because the costs are too high, the capital employed is too high and the returns are too low. So the answer is optimization, digitalization and automation. And so far, we will see over the next 2, 3 years, it's not a revolution, it's an evolutionary process. We will see over the next years, some significant changes in the structure of agriculture itself, but especially also of paival with regard the customers. So well, I need to go into details to explain what we are doing here, but the key message for the capital market is fiber will reduce the capital, invest capital employed in the German agribusiness significantly, and we don't talk about €10,000,000 And this has to do with the digitalization.
So again, some headcount reductions will be expected. Change in the skill profile of our people is necessary. You need more consultants. You need more people who really understand the visualization process, the applications and who can also explain the complexity of all these operators, which will be put to the market over the next years. And this has, of course, a really insignificant impact on our traditional business.
Thank you very much. I'm working on a little report on agricultural technology. So that's really, really helpful. Thank you.
Well, if we can support you also with our specialists and experts here, don't hesitate to call me. Just the 2 of us will get it done.
Thank you. That was tremendous.
Our next question comes from Un Inkel from Pareto Securities.
First one on renewables. Obviously, you had made an important sale already in Q3. My question would be whether that whether we can expect in the coming years a little bit smoother development of the business over the entire fiscal year. So far, it's very much back end loaded. Can we expect a more balanced development of that business in the coming years as it gets bigger within your portfolio?
Second question as well on renewables, which is really going through the roof as far as you can see it. Doesn't that attract more competition in that field? Do you maybe you can add a little bit color on what is going on within the competitive environment here in that field? And thirdly, I saw in a document that you mentioned that the sale of the fuel station is imminent. Probably, you will not provide numbers here, but maybe some remarks how far you are in the process would be helpful.
Thanks a lot.
Thanks for the questions. I'll start with the 3rd question. Of course, at this point in time, we do not want to provide figures to the market for a lot of reasons. And I hope for your understanding, and this is really very important. We are in the closing process right now, and we expect 31st December this year that we are through this process.
And then, of course, we go to the Capital Market immediately and explain what's happening on the fuel station side. The reason why we did that has to do also with the question of Mr. Muller. We did that because we have an economics Eco, E C O, Economics project in place to become much more green company, a more sustainable, environmental oriented and also to try to create businesses and new business models in this economic scenario. And of course, the fuel station business, I think, is in a peak right now.
We have all the discussions around the traditional cars and diesel and all that stuff. And so far, I think it is the right time to sell this operation because I do not see a really brilliant future ahead. And we are going to invest more and more also in e load stations. In Germany. We are with 1 e load charging cards market leader in Germany meanwhile.
And maybe you have heard that the federal government is going to support roundabout 1,000,000 loading stations all over Germany. And Baibars will play here a significant role or an important role, hopefully. Then your first question, smoother development. So I'm not quite sure whether I understood what you really mean. Smoother development, I do not want to see.
I would like to see a much more aggressive development, especially on the project side, because we have opportunities in the markets, which are really extraordinary. And with markets, I mean the global market. Taking, for instance, Australia. Australia is becoming more and more important for us. Japan.
Japan is changing more and more the energy policy, which does not mean they are leaving the nuclear power policy at all. But the Renewable Energy business is going to play a much more important role as it was in the past. And the same applies for some Latin American states. In Mexico, for instance, we won a big project in Malaysia, Indonesia and so forth. We are more or less all over the world in the project business.
And the reason why we are looking for further stakeholder and shareholder in this company to bring fresh value to the party is that we see much more opportunities as we are able to handle right now or willing to handle right now. And we have 10 gigawatts at this point in time in the pipeline. And we are selling, as you have heard this year, 6 60 megawatts. So there's really room for improvement. The bottleneck I see is not the financials are not the financials.
The bottleneck are the experts, the engineers, project managers and people with the right skill profile. Nevertheless, if I understood you correctly that you mean a more balanced structure of RE, I understand what you are saying. And this, I support internally as well very much because just to depend on the project business, at this point in time, it's not a risk at all. But over years, you never know what's happening in the project business. We are very flexible from a cost point of view.
Nevertheless, this could be a risk. And this is the reason why we stick to the solar module trading business, where we are, as I explained before, very in a very positive shape. And we are creating more and more maintenance and service contracts with customers for the wind and solar facilities they have on the balance sheet. So we are becoming more a service provider and solution integration provider to customers. And I think that this will be, over the years, a very important business pillar to balance a little bit the ups and downs in the project business.
You can compare that with the development of the IT industry, let me say, 10, 15 years ago, where the solution integration business and the service business became more and more important in comparison to the box shipment, as we call it. I used to work for digital equipment. And so far, you are right, and we are working on that. Nevertheless, the most important pillar from a profit point of view and also the workload for the employees in BioWare RE is, of course, the project business. Is this okay for you?
Maybe I can make myself a little clearer. I was just referring to whether the project sales will be seen over the fiscal year, so more in Q1, more in Q2, more in Q3 than having it all at the last quarter. That was what I was referring to.
Yes. Okay. I understand your point. But unfortunately, we can't plan that. It depends on the projects, on the options and on the development on the projects.
And I understand for analysts that's complicated or not easy to make then a fair judgment whether the results come or not. But in the past over 10 years, we never had a problem with meeting our goals. The ball is always a match. In other words, if you say we bring a higher profit as the year before, for instance, then it will come, even if it's just a question of a few weeks. And this is, of course, it's a subject always to be discussed internally, but it's always the same answer.
You can't plan it. It is as it is. This is the business model. That's the type of business in which we are as a project developer. But the good news is that we know exactly how many projects, how many megawatts are in the pipeline.
And I'll tell you, as long as we have such a run on these projects from the investor side, I'm absolutely relaxed. And we know already the outcome of 2019. Unfortunately, due to my statement, I do not want to give a guidance to the market. I can't tell you the figure. We know the figure very, very let me say, well, there are always maybe once upon that, it can be an event which is problematic, but we know exactly the outcome of 2019.
And just give us some trust, and we will not be disappointed.
Okay. Maybe
you asked a question regarding the competition and the overall environment in this field. And I think as Mr. Professor Lutz pointed out, we have a huge pipeline. We recently acquired even in the U. S.
A pipeline of 1 point 3 gigawatt. So I think there's a lot of work for us to do. And in terms competition in Germany, I'm not sure if you know these guys because they're not just stock listed companies. But in Germany, it's WPD and at RAC, Juvy, where type of competition internationally is Einstein, Enkamp, WPO, yes?
And the big the large utilities are talking a lot about renewables, but they don't have the expertise. They don't have the experts. And they have to take care of the losses in the conventional energy business in which they are. And we don't talk so much in the public about it, but we are very successful. That's the difference.
Maybe this is our differentiator, right? Is this answering your questions?
Absolutely. Thanks.
So next one.
Our next question comes from Michael Schafer from Commerzbank.
Yes. I hope that I again gave some answers on my questions. So I have 3 of them. Good morning, gentlemen. First one, Mr.
Lewis, on your statements on the input business that you have a rather encouraging outlook heading into the Q4. So I wonder coming from a drought affected 2018 and now with some decent rains seen over the past couple of months, probably also on your service areas and wheat prices rebounding nicely and also the future looks quite encouraging. I wonder whether you can shed some light on how you see the input business, primarily the fertilizer business evolving throughout the Q4. What's basically the farmer's appetite there? Maybe some quantification what you see the business being up year over year would be helpful.
The second one is on your statements on soy trade that basically the U. S, China wrangling basically held back business or at least put a lot of pressure on the European side because the U. S. Basically reverted volumes to Europe putting pressure there. As it looks like right now, at least the Chinese opened the door to get more inputs and more soy from the U.
S. So the outlet is changing again, so the trade flows are changing. I wonder if we if this continues heading into 2020, how do you see basically your soy trading business or your volume driven business, let's put it that way in more general terms, evolving into 2020? And last, not least, on the Ag equipment side of things. So I wonder, given the strong order book you're indicating, so what's the problem with class basically so that they are not delivering?
Has this something to do with any kind of timing issues related to Agutetinica? Is this do you have production issues there? Any kind of quantification what you are missing there? Is this basically the €2,000,000 delta compared to last year, which you are missing in the Q3 and then heading into the Q4? So really, what's the issue there with class?
So thank you.
Okay. Mr. Sheryl, thanks for the question. I'll start with the last one. It has to do with the manufacturing capacity.
As always, we have a capital of EUR 3,000,000 comparison to 2018. It had to do with, let me say, reluctance of the farmers a few months ago due to the uncertainty in the agribusiness and weather conditions and so forth. And suddenly, the order intake came. So we were also, to be honest, a little bit surprised. So we have a gap of €3,000,000 A few days ago, we had our business review with the management.
And they say the management is convinced due to the order intake, we have the chance to close the gap to the previous year, so 3 years, EUR 3,000,000. And of course, we are only as good as the manufacturer is. And this has to do with the manufacturing capacity. I will have some discussions about that also with the top management of Klas in the Agri Technical Fair. And the confirmation of our management is to close the gap.
In other words, we will be in a position to provide equipment to the farmers. Nevertheless, I'm a little bit more careful. I learned my lessons over the last 12 years. So it's not always the case then that you have 100% performance with regard to the manufacturers and also our organization. So the bottom line, I'm positive we closed the gap.
To the soy trade, which is very important, as you know, for Syfytra in Rotterdam this year, the business is very complicated. I pointed out that the profit we have in Basst is mainly based on our specialty business and soya and some other commodities that's more or less a 0 euro based business, unfortunately. Now we know that the news agencies had some news with regard to a potential agreement between the United States and China with regard to the trading hurdles. So over the last 12 15, 12 months, we had a change of the commodity flow in the world. So Latin America, Argentina and Brazil exported soy to China.
The U. S. Guys, the farmers exported to Rio de la Plata in Argentina to the crushing mills, and we imported. So from Argentina, U. S.
Produced soy to Europe. And of course, this is a complete chaos. And the logistical checkups very high. Even our functional margin, which is normally, let's say, bet is a little bit too much, but it's realistic to create such functional margins where you're not very successful, not because the management failed, but due to the complicated market flows in this world. If there is a change now and we are coming back, let me say, more which we were used to over many years, then I'm convinced that Soy will in 2020 will be back on track and we will make some nice profit with soya because we are the most important supplier to the compound feed industry in Europe.
So there is no way without Baiva and Seviertra and Rotterdam. Well, it depends now on the political decisions and what is coming true. If you look back over the last weeks, we had again and again some positive messages from the U. S. Government.
And then came some more, let me say, skeptical comments from the Chinese side. So we will see. I don't know. That's it's unclear. And the input
Maybe a couple of words about the input business. As we stated in the report, we do expect a catch up in the input business. The demand for fertilizer was quite low in the third quarter. So for that reason, we do expect a catch up effect. What we are missing is definitely the wrap feed business that has decreased.
And I think it will also depend from the prices. As you know, the big production companies have reduced the production in order to keep the prices high. So it will also depend public from the price.
The rapeseed was a very important commodity in Germany over many years. We have a reduction of 25%, which is, of course, significant. And we feel that in the 1st 9 months.
Okay. Can I come back to the past situation there? Looking at the 9 months, I mean, you lost something at EUR 30,000,000 EBIT year over year. Is this primarily due to the, let's say, hardly positive functional margin in the straight flow? Or is this exaggerating basically?
First of all, we lost from this, what was it, euros 13,000,000 gap to 2018, roundabout €10,000,000 come from Iran, from this political situation with Soya and what was else? These two things. So Iran, we stopped the business, as you know, because we have to protect our people. And of course, the shipment, the export of agri resources and agri commodities is legally allowed due to the charter of the United Nations, but Mr. Trump decided to put on the blacklist ship owners, vessels and financial institutes.
That's just really hyphocratic what's happening here. And our friends and colleagues from the ABCs in the United States are doing the job now. And we had to stop it, just for security reasons. And this is around about €4,000,000 and the rest is more or our commodity business and due to the problems and the different flows on Soller. So it's not, in principle, a functional margin problem.
And the profit, as I said, I would say 90% out of this €10,000,000 I don't have a clear split right now in front of me is coming from the specialty business. With other words, it's extremely important to expand the specialty business to have a more stable profitability and also a sustainable profitability in this international trading business.
And Claus, if I may add to on the situation on bus, Mr. Schafer. A portion of around €4,000,000 is related to a lower U. K. Business, in particular, due to the low demand on from the feedstock industry there over there because we had a very mild winter seen there and a lower demand on products from bust, in particular in the U.
K. The U. K. Business normally is very stable and very strong. And that was an effect of €3,000,000 to €4,000,000 particularly in this year's fiscal quarter.
Exactly. And €1,000,000 to €2,000,000 is melting barley because the demand also from the distilleries in Scotland and so forth. So whisky, you have to drink more whisky, please, that we have 100 demand in the position, Scottish whisky. This is an order now. But we are suffering a little bit under that as well.
And of course, but it's not to be defined on clear figures. Of course, the Brexit chaos in U. K. Is also affecting our business. And for instance, our operation in Glasgow, Sefidra Limited, they are exporting commodities to Spain.
It's a very traditional business relationship, and it's more or less a standstill. But there's no reason at this point in time, but it's more or less a standstill in this export activity. So what we need is a clear as many other industries and companies as well, we need a clear decision what's happening now with this bloody Brexit.
Okay. I'll go shopping now.
I don't
Our next question comes from Roland Finner from ODDO
BHF. Yes, good morning. Three questions, if I may, on the agricultural segment. Firstly, I think you mentioned that you are reshaping your agri commodity business. So could you shed some more light what are you shooting for in the next years?
And secondly, Agri Trade and Service, if I'm not mistaken, you had an EBIT loss in the 3rd quarter. Could you explain this a little bit more in detail? And the third question more mid term strategic outlook on your international agri trading and the German business. How do you want to reshape it in a way that you generate decent capital returns in the end? Thank you.
Start with you are talking about reshaping and so forth. I speak about the German business. That's the first question. Business, Germany, I agree. Okay.
So your last point. How do we do that? Well, that's a very complicated restructuring process. I don't want to bother you with details about all these measures we have in place that has to do with the digitalization and so forth. But the key message is as follows.
At this point in time, we have around about €600,000,000 capital employed in the German hydro business. And I said before, we have to reduce this capital employed because heavy asset oriented significantly. And this is not about CHF 50,000,000 or CHF 100,000,000 must be more. Detailed figure I can't provide at this point in time. So we reduce the capital employed.
That's the first thing. The second thing is, how do we achieve this? Because the working capital for purchasing the harvest in Germany is as it is. It has to do with the development of the commodity prices, especially at the stock exchange in Chicago. That's the basic line or basis for that.
How do we achieve it? We need to reduce our site structure and the number of sites we have in our core areas. And this is repair. This is a plan over 2 years. And we have right now only in the southern part of Germany.
I don't want to talk about Austria and Eastern Europe. It's just about Germany because here, we see really the necessity to make a turnaround process. We have a 2 years plan. At this point in time, we have a little bit more than 200 agri sites. It has nothing to do with the machinery business.
It's just origination and input business, nothing else, 200, more or less, 220, I guess. And we will go down to roundabout 80 to 100 sites over the next years. And this has to do with my statement, we want to become a more light asset oriented company. So if the revenue and the income more or less is stable, you have a lower capital employed. And the return of the capital employed more or less automatically must be much higher as it is right now.
And the return will be, let me say, 6% to 8% in a normal year. We have always ups and downs in the agribusiness. And especially, there is one point we can't really calculate. That's the image problem of the conventional agriculture sector in Germany. All people are talking about organic business and local business and eco business and eco growing of agri products, but the market share is still very low.
And so far, there's a lot of political blah blah. Reality is completely different, but it creates uncertainty with regard to investments of the farmer. It creates uncertainty in the markets. It creates uncertainty on your side. But the reality is that the conventional business is stable, but the margins are under pressure.
And we lost over the last year roundabout years over the last year, per year roundabout €30,000,000 gross margin. And this needs to be compensated as fast as possible. So that's what's happening in the German agri business. Is this answer enough for this point?
That's very helpful. Thank you.
Then what was the first you wanted to answer the first question?
I think, Mr. Fendler, if I may I'm coming back to this deviation in result you mentioned. If I got it right, was it the question what happened in the Q3? I guess that was your point, isn't it?
Yes.
Okay. The Q3 traditionally is very weak on the agribusiness. It's the harvesting quarter where nearly no business is actually running, no input business is running because the farmers are out with the harvest and the marketing of the new harvest will only start at least at the end of the Q3 or in the Q4. And if you look at the situation, meaning the result contribution after 6 months, half year on the Viva business, it was 24,000,000 and it went down to 10,000,000. So it's a minus of 13%, 14%.
But it's the same situation last year, where we had 11% after the half year or the first half year, and it went down to minus €1,500,000,000 So it's a similar situation. It's just reflecting the weaker business in the Q3. But we are €10,000,000 or what ahead of last year. This is our postponing effects in the input business that we mentioned earlier that will come in the Q4. And we saw an uptick in business also in the marketing on the harvest last year, which is expected also to come at least in November, December now.
So nothing special or nothing has happened outstanding in the Q3. Is the sense okay so far?
It's fine, yes. Thank you.
Okay. Then we come to the ReShape. Your first question of our agri commodity business, you mean fast, I guess. That's what I said. We need to improve the specialty business, what we did in the past already.
I always said, I would like to see, on a regular basis, in a full swing and normal year, euros 40,000,000 EBIT in Bus, light lightest asset oriented, euros 20,000,000 from commodity trading and euros 20,000,000 from specialties, maybe due to this lack of profitability opportunity in the commodity business, we need to increase a little bit our expectation also from a specialty point of view. And that's the reason why we are in the market searching for new targets, for instance, for organic niche products, vitamins, minerals for the combined feed industry and so forth. And so far, we made some little acquisitions in the past, premium crop in U. K, for instance, Royal Ingredient in the Netherlands, Trichomax, trachomex. In the Netherlands, we started a special feed component business within Zevetra and all these things.
Of course, they are these are small companies, small businesses in niches, nevertheless, very stable, sustainable stable because the feed industry, the compiled feed industry needs all these type of components. And well, that's our goal. From a cost point of view, if this is maybe also a background of your question, we restructured BOST completely over the last 2, 3 years. The cost cutting process has been finalized successfully. We laid off some people, not so much because we don't have so many employees in Rotterdam.
And we reduced especially the OA costs in past over the last year, so around about €30,000,000 So that's the plan, and that's what we are working on operationally. More important is, of course, and more complex is the restructuring process of our German agriculture business.
Our next question is a follow-up from Oliver Schwarz from Warburg.
Thank you for taking my I expect rather quick questions. First one is on the rollout of your digitalization activities into Europe. Is this connected with additional costs beyond the level we are currently seeing? And given the statements you made in as you referred to the lack of sound infrastructure in Germany. Does that affect your business plans in regards to make that business profitable in the midterm?
That would be my first question. And the second question is, Mr. Lutz, I heard you say you are investing get into a joint venture of board of participation. And in regard to e loading stations, why is that the case? I had the impression that the petrol stations and the heating oil business you currently have is basically a legacy business that is, let's say, not that core to 2 by 1, not that close to your heart, let's put it that way.
And but the e loading stations, that would be also an asset heavy business that's basically not connected to the other activities that Baibar has. So what's the reasoning behind that?
First of all, we are not investing in e load station, but in e load, how do you call it, cards? There's a loading cards, which we are providing to the
tanking cards.
Tanking cards. Tanking. Fuel, yes. Fuel is the wrong word. We are talking about electricity.
Mobility. Mobility. It's called mobility. This was Mr. Kemmel's Head of Finance.
Mr. Kemmel, as I said, it's called mobility of mobility solutions, Mr. Graz. You understand mobility solutions. What we are offering to customers are mobility solutions that's including the service of such e load stations plus the e load.
It's a credit type of credit card where we have 8,000 or 9,000 distributed already. And of course, it's also a type of give it a try because we need some alternatives to the shrinking heating oil. And we will see what's happening here. But I didn't say that we are looking for a joint venture partner in this sector. We do that on our own.
Maybe this is a misunderstanding. I spoke with regards to the conventional energy sector that this is one opportunity to look for a joint venture partner to go together with partners in a consolidated market environment through this cash cow mode. That's what I wanted to say. It's nothing to do with Elo. And you're absolutely right.
The fuel stations is not really in the bottom of my heart here of anyone sitting around this table, I guess. And due to this economics strategy, it was for us clear that we are going to divest or we start some divestments here. It's not completely divested. With regard to fuel stations, which is a part of the agribusiness and the machinery business because this is closely linked with our traditional business. And Kessoul was it's a different story, so to say.
And with regard to FarmVect, this is really a complex task, to be honest. And what we want to do, at this point in time, we don't have the resources to do it due to our private placement of RE. But what we want to do and we will start year, we are opening also the FarmFX environment for investors. We are looking for a partner. You may call it joint venture partner, whatever.
And this process will start end of Q1 2020. And what should be brought from a potential partner to the party is quite simple, infrastructure, know how and of course, financial resources as well. So to answer your question precisely, I do not want to create additional costs for FarmVex for the scale process on a European level. This needs to be loaded by a partner. Whether we will be successful with that or not, we will see.
But the process will be started end of
Q1. There are no further questions over the phone.
Then I would like to thank you for your participation and interest in this conference call. The next one will take place here in Munich on the 26th March next year, but we will see us until then. I think it's also a little bit too early to wish you Merry Christmas. Yes. It's a season.
And thank you, Mr. Lutz and Mr. Helper. Goodbye.
This concludes today's call. Thank you for your participation.