The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Markus Lesser, CEO. Please go ahead, sir.
Yeah, good morning, everyone. From my side, thank you for joining us today in this conference call on the results of the first quarter 2024. Going on, I would like to share with you an outline of the presentation and the procedure of today's call. As usual, I will start with an overview of the operational highlights of the first quarter and will then comment on our operational achievements in more detail. After that, our new CFO, Harald Wilbert, will provide an overview of the financial highlights of the first quarter and will then comment on the financial figures in more detail. I will conclude the presentation with some remarks on the outlook for the remainder of 2024. As always, we will then open the line for the sell-side analysts only.
All other participants will stay in listen-only mode, as it is our company procedure for years. As usual, our slides can be found on our investor relations website. Having said this, I would now like to draw your attention to slide three. In operational terms, we had a good start to the year and continues to make good progress in all of our business segments. I want to point out that we did this while dealing with still-challenging market environment with several external factors that slowed us down, such as delays in transport permits, turbine delivery issues.
Especially this is a special thing, especially a shift in COD had been caused by bad weather conditions, like a lot of rain, which made the construction impossible, and heavy winds, which is good for our operational portfolio, but a bad thing if you want to construct. In view of these market conditions, we are pleased with the progress achieved in quarter 1. In total, we put wind farms with an output of 25.3 megawatt in operation in Germany. We strengthened our position as IPP. Our own wind power generation portfolio grew from 321 megawatt last year to 370 megawatt as of March 31, 2024. Due to this increase in production capacities, we are able to grow the power generation output by 60% year-over-year. Construction activity is very high.
As per end of March, we had projects with a capacity of 276 MW under construction, mostly intended for our own generation portfolio. We were successful with three projects, 26.4 MW, submitted in the February tender in Germany, and we have submitted additional 91.5 MW in the May tender. So, I think this is a real high number if you have in mind all those projects, if they are successful in the tender. So we start construction of another 100, close to 118 MW, in the next upcoming weeks. In our PV business, we also had a success.
We sold a 240-megawatt-peak project in South Africa. Our project pipeline increased 43% year-over-year to another record level of 19.8 GW peak. And last but not least, our service business continued to perform well. It now manages a capacity of about 2.9 GW.
On slide four, you see the expansion of our generation portfolio, which continues. If you see the total number, we talk about 645 MW in operation or under construction. If you put all tender numbers together, then we come to a number which is a little bit higher. We talk about 764 MW, which will be soon under construction or in operation. So first quarter of 2024 and half of the target of 1.5 GW in view. Why do we talk about 370 MW? Sometimes the questions occur. In Papenroda, we dismantled 19 MW. So we put more projects in operation.
But because of the dismantling, we had to lower our total amount of operational wind farms. Nevertheless, it's the preparation for the wind farm Papenroda, which with 59 MW will be one of our big projects. So in total, we have, we produced 247 GWh.
If you calculate additional containment of internal 10 GWh, it's 257 GWh green energy, which we produced. This is an increase of 60% 16% more than in the first quarter of last year. And we saved 186 kilotons of CO2. Remarkable is that the hidden reserves accumulated in the portfolio to EUR 214.2 million. The project the project pipeline on page five, we see the project pipeline is increasing heavily. We're talking about 350 projects we have now in phase one, two, four, which we are working on. In total, for your information, we talk about more than 520 projects. So this is a remarkable high number.
But, you know, this is the time where we have to invest in size due to the situation that we see that this will be always a good, which is small, a small good and very seldom good. So that's why we invest in now there. So we the total pipeline grew to 119.8 gigawatts, 5.9 gigawatts peak more than the year before. And the wind onshore pipeline, it went up by 1.3 gigawatts to 9.78 gigawatts. And the PV pipeline from 7 to 7.5 gigawatts peak, which is an increase of 2.1 gigawatts. Additionally, we have our 2.5 gigawatts in offshore additionally in this total amount. On the next page, you see the project pipeline wind onshore, which has increased by 1.4 gigawatts.
I think really remarkable is if you see look to the numbers of Germany and France, and we talked then about 821 megawatts in permitting phase. One additional remark alone in the first quarter, we went with another or we put another 165 megawatts into the permitting status. From that point of view, you see we have enough potential for the future. So two wind farms completed. One wind farm completed for an external investor. 265 megawatts in Germany under construction and 11 in France. And, another two wind farm permits we got in quarter 1. So the PV pipeline grew as well. We could sell a project in South Africa, Khauta project, 240 megawatt peak. The sales-wise price was around the middle 1 digit million EUR.
It depends on the milestones, which shall be finalized in the next upcoming years. So I would like to hand over to Harald.
Thank you so far, Markus. For those who don't know me, I'm Harald Wilbert. I joined the executive board in October last year and then taking over the role as CFO April this year. Really happy to be here. And I will now take over part two of the presentation today. Looking at the financial highlights, the Q1 2024 results reflect the high construction activity for the buildup of our IPP portfolio as well as the ongoing investments in our growing development pipeline. Total output grew by 25% to EUR 57 million, the highest Q1 number in PV history. And this remarkable this is remarkable considering the hindering factors Markus just mentioned. EBITDA was stable at EUR 8.5 million.
In addition, we created hidden reserves of EUR 5.7 million in Q1, which leads to an EBITDA adjusted of EUR 14.2 million. I will comment on the earning drivers in more detail on the next slide. Our cash position increased by EUR 40 million compared to end of last year, now to EUR 130.1 million. This big increase can be explained by the use of pre-financing lines for two projects and will normalize during the course of the year with further construction activities. It is worth to say that our liquidity position, including credit lines, increased from EUR 219 million at the end of last year to 241 million at the end of Q1.
Equity declined slightly to EUR 204 million, but total hidden reserves in the IPP portfolio increased from EUR 208.4 million at the end of financial year 2023 to EUR 214.2 million at the end of Q1.
Looking at our income statement and the key earning drivers, operating performance and earnings were mainly driven by the result from power generation, which accounted for approximately 56% of group EBITDA. It was driven by general contractor and project development services for wind farm projects. It was driven by internal sales related to build up our IPP portfolio. It was driven by strong performance of our service business. While total output came in with EUR 57 million, much higher than previous year, EBITDA was stable at EUR 8.5 million. This reflects the fact that we worked slightly more on our own IPP project in the first quarter than compared to the previous year first quarter. However, the first quarter of a year is not really representative.
Personal expenses increased by EUR 2.1 million, especially driven by the increase of the number of employees +68, which is in line with our business growth. Looking at the segments, we see that all three segments grew significantly. Total output of segment project development increased the most to EUR 54.4 million, which corresponds a remarkable plus of 162%. Reason here, the high construction and development activities. Total output of segment power generation increased to EUR 26.1 million, which equates a plus of 40%.
Total output of segment service increased to EUR 8.1 million, which corresponds a plus of 20%. Of course, this is the view before consolidation. Due to the transfer of projects in our IPP portfolio, consolidation increased as well for total output from EUR 5.1 million to EUR 31.7 million EUR 31.7 million euros. EBITDA-wise, the segment power generation has with EUR 20.1 million euros the highest contribution.
And this with stable and recurring EBITDAs, mostly backed by the EEG tariff. Coming to my last slide, our balance sheet remains solid with a cash position of EUR 130 million and an equity ratio of 17.3% adjusted by hidden reserves, even 30.0%. Liabilities to banks increased further as the buildup of our IPP portfolio continued in Q1. It is worth to mention that the majority of these bank liabilities are non-recourse project financing. On the asset side, we see that most is allocated to property, plant equipment, as well as inventories, what we see as an investment in stable value. Yes, with that, I would like to hand back to Markus for the outlook.
Thank you, Harald. Ladies and gentlemen, this leads me to the outlook. Based on the Q1 results, we are confirming our guidance for the full year 2024 for the group EBITDA in the range EUR 40 million-EUR 50 million. We can also confirm our Scale up 2.0 targets for 2027. With the successful work we have done in the past years, the foundation for achieving our ambitious targets has been laid. We are very positive that we will achieve them. We will continue to build up our IPP portfolio. The strong growth can be seen by the following numbers. As I already said, we have 276 MW under construction. We have another 170.9 MW in tender or construction preparation or construction. That means in sum, we talk about 394 MW. And that in the first quarter of 2024.
If you add 394 megawatts to the already existing operational wind farms, we talk about 764 megawatts, which are in operation or will be in operation in the next 24 months. There's a very good outlook, and I think it's a very good perspective for the whole company. Additionally, we have now reached an IPP break even with the size of our portfolio. That means for us that the power generation segment will provide more than 50% of group EBITDA up before consolidation based on recurring revenues. And, you know, this was always the target to get the volatility down when we started scale-up. So now we are showing that we are ongoing and now that we have more and more stable, stable, income. We're also planning to sell projects in international markets in wind as well as in PV.
Having said this, we have now we have to always to say that we have a market environment, which is challenging. We have, still, to bear delivery issues. We have still, issues related to costs in material and equipment. And we have on the other side opportunities in efficient machines. And we see also that the interest rate situation is, not anymore giving the pressure to this to this branch as before. The sales process are ongoing, e.g., in U.S., U.K., Romania. We hope that in the U.S., if everything runs right, we can give some good news in the next weeks. But it's always the same. We have to wait until it is signed and closed. And then we can come up with good news. Ladies and gentlemen, this concludes my presentation. Thank you for your attention. We are now open for questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, may press star and two. Participants are requested to use only handsets when asking their questions. Anyone who has a question may press star and one at this time. The first question comes from the line of Jean Bauer with Wilbert Research. Please go ahead.
Good morning, Markus. Thank you for taking my question.
Good morning.
One second. You mentioned in your report that you are currently implementing some, let's call it, internal metrics, digitization, more streamlined organization. Can you put a figure on that? So how much how high will the costs be in the current year?
All right maybe you'll give a number. So, you talk about the whole internal organization measures we have in front of us. Yes. So we have some expenditures related to EEG and organizational measures. So, due to the big growth we have in front of us, it's always important that we follow with the organization this big growth. That means changes. We talk about increase of personnel staff on one hand. And on the other side, we talk about organization state. We have a PMO procedure in place, so that we manage, and we have around about 30, 40, 80, 80, sorry, 80 tasks in front of us. In this total amount of these measures are maybe around about a low 1-digit million EUR amount. Yeah.
Maybe I can add so, we have on the organizational side measures, we have on the professional side measures, digitalization. Then, on the employee side and management side, so there are a lot of measures are defined. They're all connected to Scale up 2.0 that we will fulfill their our goals. We are in a good way to do this. This is a program this will for sure needs a couple of years. So nothing is done in one day or so, of course. So some measures will take a while, one, two, three years. But we think that we are then really good prepared to fulfill our targets, long-term targets with these roughly 80 measures.
All right t hank you. One last question regarding offshore wind business, c an you share a little bit of light on where you're heading there, what that means for the outlook for the coming years? Is there any probability that we will see some positive earnings contribution from those projects in the next years?
Sorry. Can you repeat? We have a little problem with the line here. We can't hear you really well. So can you give us the question again, please?
Sure. Regarding your offshore wind business, can you shed a little bit of light on the progress there and where you're standing with those projects? And also maybe is there any positive income that can be expected from that side?
So we work on this to have a positive impact one time. But it is, in Vietnam, we are waiting still on the detailed regulation in terms of getting, they will come up with projects which are preferred. And we working on this to be one of these preferred projects. And the tariff is not clear till now. So these are two points. So secondly, we have in Latvia, we are waiting for the tender. And so this what we are expecting in the second half of the year. So this is what we're working on. If you see, during these times, we're working on studies to show that these projects are that the construction runs right.
We're working on a lot of studies around fishes and birds, and we make wind measurements. So this is what we're doing now to have the basis for financing. Yeah. Okay.
All right. Thank you. And so, thank you for hosting those calls now for a few years. And I'm wishing you all the best for your personal future.
Thank you for joining us and for the interest in our company.
The next question comes from a line of Karsten von Blumenthal with First Berlin Equity Research. Please go ahead.
Good morning, Markus. And a very warm welcome to Harald. Happy to have you here on the conference call. My first question is regarding the electricity generation segment. You had more favorable wind conditions and how much higher power prices. But still, there's more to an excellent Q1 result. And in the Q1 report, I found that you could lower your OPEX from EUR 6.7 million to EUR 4.6 million. Perhaps you could shed a bit of light on this. OPEX.
Do you mean the OPEX on the IPP?
Yes. Mm-hmm.
Let me think about that, Karsten. In the moment, I don't know anymore why we had this increase, or these differences.
Yeah. No problem. You can give me.
They are no special effects I'm aware of. Yeah. So in a moment. Because I was surprised to have much higher revenue, but OpEx down.
That is particularly good. But I would like to know why. And you can tell me later why this is the case. My second question is regarding the service business. Remarkably good EBITDA margin in terms of external sales. Anything in the product mix that was better than last year? Or is it just the internal sales that increased that resulted in this good result?
Yeah w e could increase the amount of external services, and amounts, I think, above 60%. You know, we started originally with, mainly, with a lot of internal earnings and turnover. So that's what we flip now. And this is a good result from our side that we become more and more independent from the internal business. And shows that we are competitive with these units.
All right. Thanks for that. You mentioned the supply chain issues, late transport approvals, weather-related problems at the construction sites. Will this lead to a postponement of commissioning of the wind farms beyond 2024? No. No, no, no. It's only, you know, we in some of these projects, we wanted to finalize this winter.
So in December, January, and some of them, so some of them even cables, we couldn't put in because we had the groundwater already 10 meter centimeters below the surface. And so therefore, you can imagine how heavy if you want to go with heavy trucks and with heavy cranes on these areas that you have a lot of problems. And that's what we led to, delivery times shifts of two to three months. Okay. But no postponement beyond 2024. You can do what you want to do this year. That's good to hear. Yeah. Yeah. I think there's no impact on the future projects, only for the projects which planned to be finalized in the first quarter. And now some of them are upcoming now.
I think in the next weeks, then it will be done. Mr. Blumenthal, you asked the question before about the power generation, why we are better there with other operating expenses. And the reason we looked it up is that in the last year, we had to build a provision for the Strompreisbremse. This was a one-time effect. And this was not necessary for 2024.
Right. Yeah. I remember. Yeah. Thanks for giving this information. Now I understand it. Perfect. I had to look at your equity ratio, which is now roughly 17%, last time 19%, d oes this cause a bit of problems with the banks for you?
Can you repeat it? Equity ratio. Yeah. Can you repeat the question? Because the line is not so good.
Yeah. Yeah. I tried again. Your equity ratio was 17%, which is relatively low, I know that this has to do with the IFRS. But does it does this cause any problems with your banks in the financing of projects? Or is it still okay?
No. We see this, by the way, as a temporary effect. The goal is, of course, to raise the equity ratio above 20%. But this can happen interim-wise, a quarter, Q1 now. So this is temporary. But this is no big problem, 17% for us. If it's lower than 15%, of course, then you can raise a flag. But in the moment, we are good with this.
Okay. Great to hear. When I have a look into your PV pipeline in the Q1 report, I was quite puzzled to see that you have 1,250 megawatts in Poland in phase three. But when I saw your presentation, I think it was 125. So perhaps there's a zero too much in the Q1 report. Or what is your figure for phase three PV projects in Poland?
Yeah. Good that you saw. I saw that there's a mistake in the report, the typing. We corrected it. So the presentation is right.
Okay. Perfect. Then one last question from my side. In Q1, you sold the 240-megawatt PV project rights in South Africa, a nd you reported external sales of EUR 1.4 million. So if I put these two information together, it's just roughly EUR 6,000 per megawatt you got for the project rights. That?
No. No. So you see, in South Africa, only to describe it, the important thing is an environmental permission. So if you have this, you have a project with a special value.
And we had the opportunity to find a customer who really steps in and takes these projects. They wanted to take the project because it's close to their region. So they wanted to get this sorted on early stage. So that's why we said, "Okay. We sell this project on early stage." And the final sum will be a mid-single-digit million amount. But you know, you need to have the permissions afterwards. And we have to work on this. Yeah. So we have a prepayment, a first payment, which is lower than EUR 1 million. Okay. Perfect. So then I understand why this is the case.
Perfect. Then I thank you very much for taking my questions.
Thank you, Karsten.
The next question comes from a line of Guido Hoymann with Metzler. Please go ahead.
Yeah. Good morning, gentlemen. Two two questions, please. The first one is, again, on your your 1.5 gigawatt target, for the IPP portfolio. I think it is relatively clear how you're going to get to the 750 megawatt maybe by beginning of 2026. But, you know, then the next step from there to 1.5 two years later is quite still quite unclear for me. You know, I I assume and maybe you can confirm. You know, I assume that then the additional, say, 800 megawatt would have to come from projects which are at the moment in phase three, which I think is around 800 in France and Germany. But if we use those, then this implies that you're hardly going to sell anything to third parties until 2027. Is that right? Or or maybe.
Yeah.
So our plan is in general 1.5 gigawatts, as you mentioned, in operation or under construction. So we have to face the situation that we said, "Okay. In some other countries than only in Germany and France, we have stable conditions." See, for example, Poland, Spain, or Italy. So it's a pan-European portfolio we're talking about. So that means, from our side, that we talk about much more potential as you can see now. Yeah. So from that point of view, it's not only Germany. But even with only Germany, we become close to 1 gigawatt in wind, which is remarkable. So. And I think, see the numbers, 645 only from the overview, 645 megawatts in permission phase. And another 265 or 270 megawatts in under construction.
Plus, and maybe not every project comes. But with a high chance and probability, the projects of phase three will come in Germany. So, and that means total amount, which is a potential of close to 900 MW plus than what we have already in operation. So you see, there is a huge potential only in Germany. And then we would like to add some other country-defined portfolios. So that from that point of view, even if we sell projects, which is always possible due to the fact that we have this high opportunity to have a big growth in front of us, which have to be financed all the time. And if there are, we don't want. But if it is necessary, we will do so. Okay.
And maybe in this context and maybe also it's also part of the answer or of the answer. You know, can you give us a rough indication how much you expect per annum, you know, to be, let's say, shifted from phase one and two into three? You know, I think in Q1, you managed, actually, to get, I think, almost 200 MW, yeah, shift from one into three. So do you have a rough indication how much that could be in the coming years per annum?
No. We have our internal plannings. But it depends all the time from the environment and from the project. There is a special uncertainty and probability. I can only say, now in the first quarter, we are ahead of our plan.
And that means with 165 MW now putting from phase two to three, so bringing projects into the permission, we have a high level. Yeah. So and we see that we will go ahead in this speed.
Okay, maybe and then the second question. And I don't want to bother you too much with accounting details. But, again, looking at this consolidation segment, I understand that this is sort of a, you know, reversal of those projects you develop, which are then, yeah, say, dedicated to be part of your IPP portfolio. But still, you know, you made yeah, you showed EUR 13 million in project development EBITDA, and minus EUR 28 million in consolidation.
Maybe can you explain a little bit how why, you know, there should be sort of a, you know, a similar, let's say, accounting treatment of revenues and costs related to those specific projects? Why is there such a big discrepancy in Q1?
So first, this is related to the reporting date, Q1. So, during the course of the year, this can change in the one or other direction. Q1 is not really representative. And then it was that the activities in the Q1 were especially for internal projects. This is why we have this high consolidation effect in the Q1. And yeah, that's more or less the explanation. But this can look different than in Q2 or Q3 accumulated. But we did a lot. And I mentioned this before, for our own IPP portfolio. And this is the main reason. Yeah. Okay. All right. Good. Thank you.
Thank you.
The next question comes from the line of Holger Steffen with SMC Research. Please go ahead.
Good morning, everybody. And welcome from my side to Mr. Wilbert. Thank you. You mentioned already the growth of your external service business, but the external revenues at this segment in the first quarter were at previous year's level. Why didn't we see any growth at this figure?
Yeah. Maybe from my side only one remark there. If we acquire projects, you will usually get in the next year an effect. So and they are not these are not big sums per project, if you have only a partial service done in the year. Yeah. So this will change in future. Yeah.
Okay. So we will see growth in the next quarters?
That should be the case, If not, I will speak with the responsible guy. Yeah. Okay. Okay.
Another thing about your segment business, your depreciation was below previous year's level in the first quarter, especially in the power generation segment, despite the further expansion of your portfolio. Is this the effect of dismantling of Papenroda? Or is there any other thing behind?
I think that's consistent. Yeah. This is we have to look up. It's 0.6 million less, compared to previous year. Yeah. We need a breakdown of this. We have to provide this answer to you then afterwards, please.
Okay. Fine. No problem. Another question about your pipeline. When we take a look at your PV pipeline, some projects in Germany at stage one disappeared in the first quarter. Are there some special reasons for this, besides usual business risk in the project development?
Yeah. We made a review, w e looked and focused more on the projects where we have a higher chance to get the projects finalized in a shorter time. So that's why we said, "Okay. Let's focus on then." And so we put some of these projects out of the pipeline. Okay. Fine. So you see, in PV, there is more; these projects are short-run projects. And you will always see in a shorter run if they are functioning or not. So there will be always much more movements as in wind, because in wind, you have long-lasting projects. Okay. Regarding your question, we looked it up now for the depreciation. What we did is we extended the useful life of our wind projects from 20 to 25 years.
This was always not a finding, but a command from the auditors why we have only 20 years useful life. So now, beginning 2024, we extended it from 20 to 25 years. Of course, then we have less amortization depreciation. Oh. Okay. That's the that's the explanation. Okay. And that's only for IFRS. So it's not for HGB or local capital. Well, that's of course.
I find new information in your quarterly report. You know. Or you act as a service provider for the development of wind parks for third parties, with a volume of 85 MW. Can you give us some more details about this business? Will you expand this service?
Yeah. It's always we always say we do services, with exception of the project development. If we do this with the project development, then it is related to get projects.
And partly, these projects are projects from landowners, for example. And they would like to have a participation. So and these kind of projects, this is, usually what we say as third-party projects, in terms of project development. Yeah. So and these are the numbers which are collected. Or the other issue is they are in the rubric sold and services that we do for third-party, the construction. So. We made a special rubric because you, as an analyst, should know that the margins are lower than if we would do it as a usual development and construction for our own. Yeah.
Okay. So you will not expand it. It's a question of special situations at some projects.
Exactly, If we do the service of construction management, for example, yeah, that's what we do for third parties and what we offer. They will be here in as well. But this is a special issue. These are not the big margins business. But it gives us a much better position for if we want to purchase equipment or in the construction because the amount we are ordering is much higher. Yeah. So this gives us advantages in our own projects as well. So this is a mixture in the calculation. Yeah. And again, for the projects, sometimes you have one machine for the landowners and one machine and two o r three machines for us. Yeah. So this is, then we divide the projects and sell these and construct the projects for the third party as well.
And these are summarized in these numbers.
Okay. I understand. My last question is about the U.S. business. You already mentioned that we will hear or may hear good news in the next weeks. But I want to ask one thing now. In the past, you have mentioned two options. You could sell the whole pipeline, or single projects. Can you tell us yet which which option will be more probable?
I think more probable is in the moment that we sell the whole business.
Okay. That's a clear answer. Okay. Thank you very much, even for all the time we worked together. And I wish you all the best for your time when you leave will leave the company in summer.
Thank you very much for your good wishes. And thank you for your interest in this company. Yeah. Are there further questions?
No sir, t here are no further questions at this time.
Okay. Then I would like Harald, maybe you would like to.
Nothing special, sir. Thank you for your interest. And Markus, you have the last word.
Yeah. And thank you for your interest from my side as well. And, mainly, I hope you will follow our AGM personally. You are heavily invited. See you.
Bye.
Bye.
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