Good morning, ladies and gentlemen. Grüße, as we say in Bern. Ladies and gentlemen, in the conference room and in the livestream. On behalf of BKW, I'd like to welcome you to today's Analyst and Media Conference on the BKW's 2023 annual results. I am Marisa Fetzer, Deputy Head of Communications. I'd like to introduce you to Robert Itschner, our CEO, and Martin Zwyssig, our CFO. And here on the picture, you can see Pierre Berger, a farmer and plant supervisor for the solar power plant and the wind turbines on Mont-Soleil and Mont-Crosin. Let me give you an idea of what to expect over the next 90 minutes. First, our CEO, Robert Itschner, will give you a brief overview of the 2023 annual results and the most important developments in the various business areas and with regard to sustainability.
Then our CFO, Martin Zwyssig, will present the 2023 financial results in more detail, and then Robert Itschner will give you an outlook into 2024. The presentations by Robert Itschner and Martin Zwyssig will be followed by a Q&A session. We have a microphone here in the room for the questions in here, and our viewers in the livestream are welcome to enter their questions online. We will answer them in the Q&A session. Let's begin with the presentations. I'd like to hand over to Robert Itschner.
Thank you.
Thank you, and a hearty welcome. Thank you, and welcome to the media conference on the year 2023. We're happy to see so many of you here in the room and online. I'm looking forward to the discussion with you later on, and I'm happy to present the first full year together with our CFO, Martin Zwyssig. As of last June, we have been collaborating very intensively and very well, and we're looking forward to the Q&A. We are happy to present a very good result to you. It's the second best result in the history of BKW, and it was influenced mainly by the energy business. We could produce more electricity, and we had a good trading result, and we made good progress when it comes to the strategic development areas, green electricity solutions, and many others. The grids were stable.
They made their contribution, and with regard to services there, we are below expectations. We had some one-off effects in the books. I'll give you more details as to what led to a negative result. Last spring, I said that at the last media conference on the year 2022, we defined plans and targets in the various areas. We have two new heads who have worked very hard to develop and promote and grow these businesses. Here you can see our results: CHF 4 billion revenue, CHF 620 million EBIT, and operating profit of CHF 432 million. To look at the history, it's less than in the year 2022, but we were able to forecast that last year it was an extraordinary year with all the upheavals on the energy markets. But we are on track with the ambitions that we communicated before.
We're going in the right direction, and we could increase our profitability.
One topic to start with. There were some doubts in the past weeks whether we would stay with the three-pillar principle. Yes, we're going to maintain the three pillars. We think this is a good strategy for BKW to achieve stability for the company. Volatility in the energy business is normal. We know that this model is robust, so we can withstand any future upheavals. So we'll stay with the three-pillar strategy, and we'll look at the individual businesses later. Energy: we worked very hard in Switzerland to lay the basis for the development of power generation, and we have a number of successes. We received the concession for the Trift power plant, the hydroelectric power plant. There was an objection that was to be expected, but we are confident that we will be able to build this power plant in the next few years.
Then there was a decision by the Federal Supreme Court on Tramelan. And again, we're confident that we can start building in the course of this year. We have a very strong pipeline for PV, photovoltaics, Alpine, and in the lowlands at Belpmoos, with a number of projects in the pipeline that we hopefully can implement over the next years. We exceeded our goal of 1,000 MW installed capacity in the new renewables. That was the goal for 2026. We were a bit ahead of schedule. We acquired a wind farm, one in Sweden, one in Italy, and we're going to set new targets to further develop this portfolio. In the introduction, I mentioned it. We want to grow with regard to products that our customers need: customized energy solutions with green electricity. And we made a big progress. We were able to conclude power agreements, PPAs.
This business gives us some independence from the absolute electricity price and helps us overcome volatility. There will be more volatility to come. We forecast that we would become nuclear fuel-free by next year in the nuclear power plant, Mühleberg. This happened earlier, in September of last year, 60 months ahead of schedule. Thus, we have lower risks in our overall production portfolio. On the grids, I mentioned it before: stable, robust performance. Robust performance with regard to the availability of our grid, 99.996% availability. That's top. We have power interruptions of about 12 minutes per year. That's top in Switzerland and Europe. The average in Switzerland is 16 minutes interruption per year. We want to do more in this respect. Availability is very important. Second point: we have good growth rates with regard to the production of renewables. 500 MW is the installed capacity.
PV in our grid, Mühleberg, has about a capacity of 360, so growth is exponential. Last year alone, we installed 130 MW capacity. We offer the grid for this. This is a major challenge, not only for us, for all grid operators in Switzerland. We have about twice as many connection applications as we can actually accept, so we have to expand our grid. In summary, we continue to invest into our grid. We did this last year, and this produces a very stable cash flow. Our services, the good news: we had small growth with regard to revenue. We have a very good order backlog, and we were awarded some good mandates last year, especially in Germany. We profit from the expansion of electrical infrastructure, high-voltage lines, etc., and infrastructures, hospitals, etc.
Here on the picture, you see the University Hospital Würzburg, where BKW Engineering was awarded a big project that will keep us busy for about 10 years. We are about to improve many aspects. We want to optimize our portfolio. That's part and parcel of our fitness program. We divested some businesses or companies, depending on the profitability. A nice result and success is that BKW Engineering was launched in Germany under this brand, BKW Engineering, and we will follow suit in Switzerland. The reactions were very positive, especially key accounts, large customers who are looking for a big and strong partner realized that in planning, in engineering, we are among the biggest in the German-speaking region. The earning power is insufficient. I mentioned that already at the beginning.
We had to book various one-off effects, and in the fourth quarter, we had to look at the portfolio and the various projects and made an in-depth review and booked a few one-off effects. We had impairments that we had to make and write-offs. We could have made this a year earlier, but it was important to do this after this in-depth review. The improvement of the earning power is a priority and will remain a priority. We are halfway through the launching phase. These are some of the topics. One has something to do with structure adjustments, creating transparency on the projects and the figures. Another aspect was leadership. The teams have to be set up in a way that they can deal with these challenges, bring about the turnaround, and move into a profitable future.
The last point was a goal that we set ourselves: businesses can only grow if they are profitable enough. They have to be profitable before we invest again. These are some of the essential elements of this fitness program that we will conclude at the end of this year. For the group, very important is the further development. I will look at this in more detail in the Outlook. We set some important bases for CO2 targets, net zero. We also decided to electrify our vehicle fleet by 2030. We have more than 3,500 cars and light commercial vehicles. In social, we pushed health and safety, something that is very important to us. We want to have the same high level of quality throughout the whole company. We signed the so-called SUVA charter to really show that we take this seriously.
Inclusion, diversity is still an important topic for BKW. We'll be working on this. We launched diversity communities where like-minded people can discuss their issues and get some support from the company. Then governance: many projects with regard to compliance. We have come a long way. We strengthened the team and our integrity line that we have had for some time. Our whistleblower system is better known. We offered more training, and we opened this integrity line not only to internal but also external staff. And of course, this is all anonymous, the whole system. So this was a review of 2023, and Martin Zwyssig will give us some more detail. Thank you, Robert. Ladies and gentlemen, good morning. I'm very happy to elaborate a little bit on the details of the very successful year 2023.
Now, first of all, the key figures for 2023 in an overview: BKW had a revenue of CHF 4.6 billion. This is a slight decrease of 12%. The main driver of this decline is the lower energy price level. We all know that the business year, 2022, was an extraordinary year. So if we compare this with 2021, then we will see a long-term trend, and the revenue growth is +29%. To me, very important on this slide is the EBIT, CHF 620 million, and this is the second-best result in BKW's history. And this is despite the fact that the EBIT is burdened with substantial non-cash value adjustments. Then onto the operating net profit. This is the operating performance of the group. It corresponds to the net profit before performance of the CENFO.
The CENFO is the Decommissioning and Waste Disposal Fund, and this operating net profit is CHF 432 million. Then net profit, which includes the income from CENFO. This was, in the 2023 financial year, very pleasing, with an increase of CHF 71 million. In the previous year, it was minus CHF 173 million, and therefore the net profit amounts to CHF 488 million. Then a further very important key figure is the operating cash flow with CHF 491 million. This, again, reflects the liquidity of the financial year, and it means that actually the very good result was received in cash. And I'll come back to that later on in the comments on the cash flow. Then ROCE, return on capital employed, is 8.1% and is well above BKW's cost of capital.
Then we had, on the one hand side, the strong increase in equity, and in combination with a lower balance sheet total, this leads to a significantly higher equity ratio of a solid 45.8%. This slide shows you the various business areas and the overall performance. First of all, revenue, but then also EBIT. Now, first of all, overall performance. In the energy business, the decline in revenue amounts to CHF 714 million. This decline is due to the fact that the energy prices were lower. Then in the grid business, the passing on of Swissgrid's tariff increases made a revenue of plus CHF 31 million, but the slightly lower throughput reduced the revenue, resulting in a net increase of CHF 23 million. Services increased its revenue by CHF 75 million.
This is mainly due to the inorganic growth of the company acquisitions made in 2022, which contributed to the group revenue for a full 12 months. Then EBIT. Energy, in line with the decline in revenue, the energy business segment also recorded the largest year-on-year decline in EBIT at -CHF 354 million. Grid is actually at previous year's level. And when it comes to services, we had to make project value adjustments and impairments on customer lists and trademark rights, which led to a loss of CHF 40 million. In the previous year, this business area generated a positive EBIT of CHF 53 million, which results in a total deviation, which is shown here as a -CHF 93 million compared to the previous year.
Now, a positive effect in connection with the employee pension fund liabilities in the corporate segment, and this is the reason for the increase of a plus of CHF 28 million. Then on this slide and the next two slides, I'll go into the details of the various business areas, energy, grid, and services. First of all, this slide shows the energy business. The overall performance, which is shown in dark blue, decreased by 24% to CHF 2.239 billion. The lower energy price level compared to the previous year is the main driver of this decline. However, compared to 2021, we can see that prices in 2023 were still above the level of energy market turmoils. To the EBIT, CHF 535 million is the decline. However, as I said, it is still an excellent result.
Due to the lower price level and lower volatility, there were opportunities in the portfolio management and trading business, and they have decreased compared to the previous year. We also used the lower price level as an opportunity to recognize non-cash impairments on the production facilities amounting to an amount of CHF 53 million. Then, on the other hand, the very good KKL fund performance had +CHF 22 million, and therefore the procurement costs fell, which had a positive impact on EBIT. Just a brief outlook at the production mix, which can be seen on the right-hand side. The weather was quite wetter compared to the previous year, led to an increase in production from hydropower and small hydropower plants to the tune of 0.7 TWh.
Then the wind turbine production increased by around 0.3 TWh compared to the previous year, primarily due to the acquisition of the Pompadour wind farm in France. Thermal power plants were used less due to price factors. Then on to the business area, grid. The grid business area recorded an increase in revenue of CHF 23 million to CHF 540 million. The passing on of higher transmission grid tariffs from Swissgrid had a positive effect. On the other hand, the lower energy transmission in the amount of CHF 8 million reduced revenue due to the fact that the winter was warmer, energy saving measures, and the expansion of PV installations. When it comes to EBIT, Swissgrid tariff increase has a neutral effect on the EBIT as it increases costs to the same extent.
The lower transmission volumes are offset by lower energy transport costs due to the discontinuation of the aforementioned electricity purchases from the very high-voltage grid, resulting in a slight increase in EBIT from CHF 146 million to CHF 147 million. The EBIT of the grid business thus remains at a very stable and reliable level. Now on to services. EBIT was increased to CHF 1.8 billion, a plus of 4%. We had to make some project value adjustments when it comes to the EBIT, which amounts to minus CHF 40 million. Then building solutions, which is the largest segment with 57%, has had an inorganic increase to. And IT and electro are also increasing. Then engineering makes up 22% of this revenue sharing, minus 8%, which is mainly due to the fact that some companies were divested.
Last but not least, infra services, which is the smallest part, 21%, is stagnating compared to the last year. The market environment in Switzerland led to the fact that the revenue declined. However, there was a positive development in Germany, and that offset the decline in Switzerland. The backlog, we have to announce that, especially when it comes to high-voltage lines, is very pleasing. Now, with -CHF 40 million, of course, this is below our expectations. In the fourth quarter, we reviewed the service companies as part of the two-year program, and we had to make substantial project value adjustments. Then there were also losses from the disposal or the closure of group companies. Due to the unsatisfactory operating performance of individual companies, we wrote down some customer lists and trademark rights to the tune of CHF 48 million.
Overall, we recorded one-off effects of CHF 90 million in the services business. However, on the other hand, we have successfully invested in structures and processes and have significantly increased transparency. And finally, the order situation, as I said, is high in all areas of the services business. Now, let us switch over to the cash flow statement. As at the reporting date, the group had cash of CHF 772 million, which roughly corresponds to the previous year. You can see this in the blue bars. The operating cash flow of CHF 704 million is attributable to the positive result supported by the reduction in working capital. We invested in fixed assets, intangible assets, and acquisitions of companies to the tune of CHF 502 million. I'll come back to that.
Other investment cash flow comprised investments in non-current financial assets and associated companies, as well as divestments of non-current assets. The investment cash flow also included CHF 41 million in investment income. That's interest and dividends, as well as the reimbursement that we received from the CENFO in accordance with the down payment model to the tune of CHF 38 million. Please note that if you add up the first four gray bars, this results in the free cash flow, and this amounts to CHF 256 million. This is another key figure and is even slightly higher than in the record year, 2022. This free cash flow was used to pay the dividend of CHF 228 million. In addition, short-term financing was further reduced by CHF 180 million.
The direct participation of Swiss pension funds in our portfolio of wind power plants as part of the asset light strategy resulted in a cash inflow of CHF 195 million. Overall, this resulted in a low net cash outflow of CHF 26 million and the aforementioned cash of CHF 772 million. Now, what is not included here is, and you have to note this, that the group continues to have untapped committed credit lines into the tune of about CHF 2 billion as a liquidity reserve. Now, where did we invest? 66% were invested into growth and 34% into maintenance. CHF 222 million of these went into the energy area, where we invested into growth, including the acquisition of the wind farms in southern Sweden and Cerignola in Italy, and also small hydropower plants.
Growth investments to grids, CHF 46 million were made with the strategic expansion of the electricity grid. In the services area, three acquisitions were made in the engineering division and infra services. When it comes to maintenance of the CHF 173 million Swiss francs, 53% again flew into the grid business together with the growth investments, BKW, and we've heard this already, invested over CHF 120 million Swiss francs into the secure, efficient, and high-performance operation of our distribution grid. Here, this overview shows you the positive development of our net debt on the left-hand side and the very balanced maturity profile of outstanding bonds on the right-hand side. Financial liabilities decreased by CHF 194 million Swiss francs to CHF 1.8 billion. The decrease is mainly due to the repayment of current financial liabilities to financial institutions.
As a result, net debt continues to fall from CHF 1.2 billion to less than CHF 1 billion. This development, of course, further strengthens our A rating. On the right-hand side, you can see the maturity profile. It is very balanced. We are excellently diversified across the time axis, and this means that we have a great deal of flexibility and also room for maneuver, which means that our financial corset can be adapted at any time to our needs. Let me come to the balance sheet of BKW. The easing on the energy markets had a positive impact on BKW's balance sheet. The 0.9 billion reduction in total assets is primarily due to the lower market values of energy derivatives and the reduced collateral. Equity increased by around CHF 0.65 billion and amounted to CHF 5 billion.
Key reasons for this strengthening are, first and foremost, the net profit, of course, of CHF 488 million, and then also the recognition of hedging gains from hedge accounting strengthened equity by CHF 300 million. BKW received cash into the tune of CHF 195 million from the sale of the 49% stake in BKW Renewables. That's in the context of the asset light strategy. In addition, dividends of CHF 228 million were paid out in the first half year, which is at the expense of equity. Due to the strong increase in equity and the lower balance sheet total, the equity ratio rose to a solid 46%. Then let's cast a look on the return on capital employed. It is at 8.1% and thus significantly higher than BKW's cost of capital due to the extraordinary result of 2022. The previous year's return is not a reference value.
Our market capitalization has grown to CHF 7.9 billion as at the end of 2023. This makes our share very attractive to international investors as well. Last but not least, let's cast a look at the dividend, the proposed dividend the board of directors proposes to the AGM, that the ordinary dividend be increased by 0.60 centimes to CHF 3.40 per share. The proposed appropriation of available earnings takes into account BKW's longstanding dividend policy, which is based on the following principles: distribution of around 40%-50% of net operating profit, a continuous dividend distribution, and a reasonable dividend yield. Now, with the proposed dividend of CHF 3.40, the payout ratio is 42%, and a dividend yield of 2.3% is achieved based on the year-end share price of CHF 149.50. In summary, BKW can look back on a very successful financial year, 2023.
The result allowed us to make substantial and necessary value adjustments both in the energy segment and, in particular, in the services business, and yet we were still able to post the second-best result in the history of BKW. This concludes my remarks, and I'd like to hand over back to Robert Itschner for the outlook. Thank you, Martin. Here are some ideas on the future that I'd like to communicate. I'll come back to the three-pillar strategy and why we will stay with this strategy, telling you why we see great opportunities. Here, we look at energy production with a lot of growth and growth in services that we see in the German-speaking area. The markets will go up and down. That's quite normal, but we are convinced that with our service offer, we are well positioned to play an important role in these markets.
We are currently about to be developing a new strategy. I will talk about that at the end of my presentation. We will look at how we want to prepare for growth in these markets. The various businesses, what are we doing in 2024? We will work in energy with topics that help us guarantee the supply security and electricity supply security. Tramelan, there, we want to start building. That's a relatively small wind park. For European standards, for Switzerland, this is big, seven turbines, and we're proud that we can build this now after many, many years of rejections and objections. We want to invest both in Switzerland and abroad. We can grow in Switzerland and abroad. We do have the necessary funds to do that, and it makes sense with regard to supply security that we invest in Europe too.
This is where we are going in the future too. Last point, we want to grow in customized solutions, PPAs or flexibility services, decentralized electricity production, and we want to develop there. What we hope there is good growth rates. These are markets that will grow strongly. There are studies that look at high percentages of PPAs in various markets, especially Germany. We think we can offer a very solid competency, and we are well anchored in these markets. As I mentioned before, this will help us to become more independent from the absolute price of electricity and survive well in times of volatility. In the grids, we will continue to work on availability of our grids. Of course, we will get involved in the political discussion on how we can master these challenges in Switzerland as cost-efficiently as possible.
We will need the help of politics to achieve these goals, etc. So this is one of the focuses among the challenges that I mentioned before. Now, with regard to services, we want to complete our two-year fitness program to have stable structures so that we can grow on the basis of the results of the 2022 financial year and set the basis for more growth in this business. This is one of our top priorities. The backlog, which is quite sizable, Martin mentioned that too, will be implemented as well as possible. These are really nice projects that we have in the pipeline and that we are happy to realize. Engineering, there, we want to position ourselves stronger in Switzerland, and with a new brand, we will create more growth opportunities, organic and inorganic. And then PV, photovoltaics, that's an interesting business.
We are among the leaders in Switzerland, and with Solstis, we were able to acquire a great company. It's a very profitable business. In the future, we want to use this brand Swisswide and expand our service offer. ESG will remain an important priority for our company. As you know, in the next few years, we will face major challenges with regard to reporting. The sustainability report is now in line with Swiss laws, and we took up the ideas of various political initiatives, and we will prepare to live up to external laws like the Supply Chain Due Diligence Act in Germany and the EU directives, EU taxonomy, CSRD, etc., etc. These are quite high requirements, but we have an excellent team that is working full steam on this. We will work on these topics. Biodiversity is an important topic. We will collaborate in the biodiversity register.
With regard to data management, we have to set a new basis with regard to these new requirements that I mentioned, and there are new laws and requirements with regard to data security. So there's a lot of work ahead of us. It's an interesting topic, and it will keep us busy over the next years, but we're well positioned. This brings me to the end of my presentation. Let me summarize. We are present in attractive markets. We will maintain the three-pillar strategy. They all play an important role from production distribution to efficient utilization in buildings and infrastructure. We are about to renew our strategy. We would like to invite you to come to see us in November when we will present the strategy. We will organize a capital market day on the 8th of November, 2024. So please reserve the day for us.
For this year, we have an EBIT outlook in a range of between CHF 650 million-CHF 750 million, better than last year, and we have a good basis to live up to that. And this brings me to the end of my presentation. Thank you for your kind attention, and we'll move on with the Q&A. Thank you, Robert Itschner and Martin Zwyssig for your presentations. Let's start with the Q&A session. In the live stream, we have a few questions already. Here in the room, if you have a question, please wait for the microphone, and please state your name, your company, and also mention who the question goes to. So we will take questions from the room and the live stream. Is there a first question here in the room? Hello, everybody. Yannik Kiess at ZKB. My first question is about value adjustment.
So you made value adjustments in services but also in energy, CHF 53 million. Could you let us know why we have a value adjustment there? And second question, in the outlook for 2024, can we assume that in the services segment there will be no more value adjustments? That's the first question. On energy, CHF 53 million. It's the valuation along the price development. Prices came down, energy prices, and that's why we made the value adjustment. So this is due to prices. And with regard to services, yes, you can assume that the value adjustments that we saw so far will not happen again. But it's a project business, and there are always value adjustments. That's part of the business. Does that answer your question? Yes? And a question on the capital light model. The pension funds, what's their interest?
The wind farm in Sweden, will the minority shareholding be sold? That will be below the free cash flow. What was it? CHF 195 or something. The asset light model. That is what we introduced. Did it for the first time? It helps us to invest without using some of the investment and still be in control. The demand on the pension fund side, yes, that's a given. We just have to bundle now so that we can put it on the market. It's just a project that we realized, but right now, we're not working on such a project. It's not on the way, but it does make sense. Yes. Please. Chong AVP. I have two or three questions on the services business and the impairments and write-offs. How many projects were affected by these value adjustments? Closed or divested? Was that a project?
How did you mean this, or was it subsidiaries? And then second question, the portfolio optimization that you mentioned. Were they job cuts, headcount reductions? So are jobs affected? And the third question is integration that is going on with the subsidiaries. The concept was that the board companies were independent. Will you change this in the future? Okay. Let me start with the last question. Depending on the business model. And there are three businesses that are differently positioned. We have different strategies in installation. We have a 20 km radius where we can service customers. We need people on site who understand the business, who offer these services, but we want to have full transparency with regard to the figures we want to use, economies of scale. So we have a close look at these projects, and integration is going on.
BKW Engineering, there, it's not so important where people are located. We can have an engineer in Munich collaborating in a project in Switzerland. The different locations, the different sites are not a drawback. We just have to see to it that everybody has access to the same resources. So it really depends on the businesses to determine what the integration depth is. We want to be close to the customers, obviously, but we also want to use this efficiency in the processes. Portfolio optimization, that will be a permanent process at BKW. Last year, we divested a few units in Switzerland. We brought some companies on the market, and we will look at the portfolio and adjust the portfolio accordingly. We will have to look at our profitability goals. It's an ongoing process.
Within the fitness program, we took a closer look at these projects and made some conclusions and decisions. Divestments, closures. We brought some companies together, merged them, as it were. We do have a big number of various entities, and we're trying to find a good degree of decentralization and complexity within the organization. The first question is something I'd rather not mention in detail. There were many projects, not just one. We had quite a backlog, and we worked through this. We have a clear standard there on how to make value adjustments. Now, we have a common view of how to make it. And now the dogs. Yes. Restructuring. We are now planning restructuring at the group level and didn't do this last year, but we made some adjustments of the capacities within individual companies. We built up capacities in other locations depending on the development.
We do not have a group-wide restructuring program. Thank you. Please. Andreas von Arx , BA, 3 questions. First question is on the guidance for 2024. Last year, the EBIT report was CHF 620 + CHF 90. Value adjustment service, CHF 53. Value adjustment energy, CHF 763 if I add this up correctly. That's above the CHF 650-CHF 750 guidance. And you're still profiting from the increasing electricity price via the hedging. And in the services business, you're expecting an improvement. What are the components here that have a negative impact on the EBIT? That's my first question. Let me take over. So you would like to drive up our EBIT slowly but surely. CHF 620 is an important figure. That's our trading result. We cannot assume that this trading result can be repeated over and over. That's the main part of my answer.
Electricity prices, yes, okay, they might increase, but we cannot assume that situations just repeat in 2024. Then on services, let me calculate. Minus CHF 40 million EBIT, CHF 90 million value adjustment plus CHF 50 million EBIT adjusted. Reported revenue, 2.7% EBIT margin. You said before in 2024, you wanted to base yourself on 2022, and there the margin was at 3%. My question now is, is this a level around 3% that we can expect for 2024? And what about the midterm outlook? The EBIT margins were significantly higher in the past. Our priority is to have a stable EBIT contribution from services after the turbulences of last year. 2022, I mentioned that as a foundation, as a basis, 2.7% or 3%, it's not so relevant. That's more or less the level we want to achieve. Then the ambition has not been changed for the coming years.
The last question on capital allocation. I'm aware that you are in the course of a strategic review, but can you give us an indication on what trading would look like now that we have looked at it in some detail? Is the expectation that you will allocate more capital to generate higher gains, or is your attitude to allocate less capital, be more cautious? What are your considerations? Yes, we are really in the midst of our strategic discussions, and we are not going to have this discussion here today. BKW will have a cautious risk policy that we will follow. In trading, in PPAs, there will be various businesses that do not involve significantly higher risks. If you can have PPAs back to back between the producer and the buyer, the risks are reduced significantly.
There, we're trying to find the right mix where we can use our strengths and where we can maximize our profitability. But please come in November. We will be able to give you more information in November. Thank you very much. Let's take some questions from the live stream before we continue here in this room. Now, we have a question in the live stream from Peter Gürtli, tax advisor. Alpiq's base hedges for the years 2024, 2025, 2026. They were published at EUR 69.20/MWh at 95% and EUR 122.60/MWh at 80% and 104.50 at 55%. Do you publish your figures too? No. BKW never gave out such details about hedging prices. We are in the same market, so therefore, you can assume that our hedges will not be completely different from Alpiq. However, we do not provide any details. Thank you.
Then let me take another question from the live stream. It is an English question. I shall read it out in English and then repeat it back in German, and we will have a German answer to it. Are the divestments that you are examining in the services business related to a specific area within services, and can you elaborate more on which assets you are considering to divest? So again, the divestments that are examined, are they in a specific services business? And can you say more about these divestments? Well, first of all, we are not in the course of planning major divestments. We're not planning a fire sale in our strategy. We are very targeted and specific. We're looking at the portfolios of the various businesses. We look at all the details. We look at profitability at the future.
What are the investments that have to be made? Does it fit our strategy? And then we will make a decision, maybe divest some areas or companies. However, we're planning to make acquisitions to complete our portfolio. So it is not a situation where we will divest major units in the coming few years or months. Thank you. Any further questions in the room? Yes, please. Konig Mirabaud Securities . I have two questions. First of all, the dividend policy. Now, I have a bit of a difficulty in understanding it because you said a payout ratio of 43%. Equity ratio is increasing. Equity is increasing, and you have a guidance, CHF 650-750 million. So that's CHF 80 million higher. Now, this would imply that the payout ratio goes beyond this target zone if you reach this midpoint.
So I ask myself, or I wondered, don't you trust your outlook yourselves, or do you just make cookie jar accounting? This is just a question that I ask myself. It's actually the contrary to what my colleague has just said, but maybe you can explain or elaborate on this. And then the second question where I wondered is the following. Now, in services, you want to reach the 22 level. Now, in view of inflation when it comes to staff costs, personnel costs, I don't think this is a home run because there are many people involved here, and we have a very dry staff market, labor market in Switzerland. We have a weak euro, and I thought, well, what are the requirements? What are the prerequisites for you to reach the 22 level? Thank you. Will you take the first one? Yes, I will. Now, dividend policy.
Now, the board of directors proposes a payout ratio of 43% this year. So now, that means about a plus of CHF 0.60 to the ordinary dividend. Now, in 2025, that will pay out on the basis of 2024. However, of course, we stand by our guidance of CHF 650-CHF 750, and it is a bit more than 40% of our net profit that we want to pay out. And accompanying, I've already mentioned it, we have a stable dividend that we want to achieve and also a respective yield or return. So therefore, I cannot give you an outlook of what the board of directors will do in 12 months' time, really. However, the guidance, we stand by it. Then on to the expectations of the services business 2024. I agree with you. It is not a home run.
However, we have to set up certain ambitions, and I think this makes sense because we saw the backlog. Most of it is contracted. It's in our books, and this gives us quite good confidence that we will achieve the figures that we published here. So that is also the reason why we don't want to go back to the 2022, 2021 level. But that's in the outlook. After 2024, we will report then where we want to go. But it is true. It is hard work. Many efforts have to be undertaken this year. Please, next question here. We have a question up here. ZKB, I have a question with regard to Mühleberg about the costs of the decommissioning in terms of the timing. You are well on track, but when it comes to costs, is everything fine? Is everything going smoothly?
Are you optimistic and confident, or are you surprised? Then the Grimsel increase of the dam. Now, what's the status there? How will you continue there? I mean, will you continue at all or not? And then wind power projects, 7 turbines that you mentioned in Switzerland. I think this is the only project that seems to be realistic. And then same question about solar installations projects in Switzerland. Could you elaborate a little bit more about what is to be expected? What can be seen as realistic? And the last question about the services business. I think you did not really answer the question, what is your perspective there? All right. Let's get started with Mühleberg Power Plant. The costs, we are on track when it comes to costs. We are ahead of schedule.
We are free of nuclear fuels now at Mühleberg, so therefore, we can also save costs. So we are on track, although we had to adapt the guidance there a little bit. So this is now offset. We are on track with regard to costs. Then the Grimsel dam. In the second quarter of this year, we will again have the licensing application that we will file, and then the Parliament of the Canton of Bern will deal with it. But we are confident that this will go through and that it will be approved over the course of the coming 12 months. Of course, this is a political process, and we will see whether there will be more appeals against the project. But here again, we are on track, and KWO is in touch with environmental organizations and has been so for quite a long time.
So we are confident that we can proceed here. Then Tramelan, wind power, is one of the 2 projects that we usually mention. We have another project. These projects were initiated back in 1928, and we have been fighting for the building permits for quite a long time. Now, in Tramelan, we were lucky to get the turbines in the first place. That was a close call, but we were successful there, and we will be able to start building once we get the building permit. Wind power in Switzerland obviously has difficulties in getting through. We have to be clear about this. However, there are many advantages: speed, cost efficiency, winter energy. These are all the advantages that this energy provides, but obviously, it is difficult to get that through in Switzerland. Then Belpmoos Solar at the Bern-Belp Airport in Bern. We are on track there too.
There are various planning steps that have been undertaken. In 2026, we might be able to connect it to the grid. That's the earliest point in time, but we are on track. Then PV alpine projects. I have communicated a lot about these too. We are definitely more optimistic than in the past, than maybe a year ago. We had a list of about 20 projects. Now, we are back to four projects where we think that they can still be realized. However, we must say there are many difficulties, and we have to see that these projects don't really get the favorable voices or advocacy in these regions. So it is a bit more difficult to realize such projects, especially in the Alps of the Bernese Oberland. But we will report on that later on again. Then the units in services that have been closed down.
I mean, I don't want to give you an exhaustive list here. We were able to read this in the media. There were various units that have been closed. For example, refurbishment of wastewater channels and so on. In the Zürich area, we had HIK that was closed. It was distributed or split up to various companies in Germany. Then we integrated one company in Germany in various other units because it was just not profitable enough. These are just a few examples that I can give you that are no longer in our portfolio. However, I do not want to communicate an exhaustive list. However, it's not dozens of units that were closed. Let me be clear here. Now, I have a question. 300 units are mentioned in the business report. I mean, there are examples where this was not under control from other companies.
Does it make sense to not consolidate it? Well, the 300 units or investments or stake holdings, we have various that have been closed, but others not. So there are a lot of stakes, and it is always difficult to find a good level and to find out what makes sense. Now, I talked about leadership structures, and this is not a contradiction. We will have to do this so that we really get full transparency. So then the goal is to have the services under the brand of BKW. Well, we will proceed step by step. We've already made a step in the right direction. We will see what happens there. I am of the opinion that the branding has to be made at the point in time where we can communicate a certain brand value. That will happen over the course of the coming few years.
With BKW Engineering, we have a very interesting model. We introduced the brand, and then we have both brands, actually BKW and Engineering, that are now combined, and this makes sense as a brand name. But it's still not under the same umbrella or roof. No, that is true, but we're still working on this as well. Now, EBIT of services, you've mentioned it. The goal remains the same. Is it still 8% EBIT margin that you want to achieve? We haven't changed any ambitions here in this respect. Otherwise, I'd love to get a little bit more of a dividend if you achieve more, actually, I must say. One more question. You make a lot of grid investments into renewable energies. Is this really paying off? Do you get the profitability, the revenue that you need? Well, this is all regulated. This is established by the Swiss government.
So in this context, yes, it does pay off. Of course, we can discuss how much it should be, but this is established and set up. We do not have any possibilities of increasing it, but we assume that the investments will increase in the future. We do have the situation that in the past year, meaning 2022, 95% of our connection applications were feasible. In 2023, it was 85% that were feasible, so we could feel these decentralized structures. The requirements are, of course, increasing with this massive growth of production in renewables. So do you have a positive saying, "No, we don't want to do this because it doesn't pay off"? Well, we do have certain obligations that we need to fulfill and grant certain connections. So that is part of the regulations. So it is difficult to get profitable.
It is profitable, and it will remain profitable in the future as well. Thank you very much. One more question, Mr. Graf. What I wanted to know is the following about the solar PV installation projects. You said that you have still four projects that are ongoing where you're very confident and optimistic. What are these projects? And last time, or maybe you could also say the status where we are at at the moment, the situation. Last time you spoke of six projects in your presentation. Which projects were actually kicked out of your plan? Well, let me try to memorize the names of the projects. We are very confident that Mont-Soleil will be one of the plans that will be realized. However, all the projects that are still pending or open still await decisions of the municipal parliaments. Then Schattenhalb is the second.
This is also still active, and we have Grindelwald. And Adelboden. Adelboden, Grindelwald. Maybe it is true. It's five projects, actually, where we are in different situations of the discussions, the political discussions. And therefore, I cannot give you any guarantees whether they will pass or that they will go through municipal parliaments and get a positive decision. And the first project was, I think my memory is definitely not as good as you. You had one more in your list. There was another one. Maybe I can help out here. It is true. In Grindelwald, we had two projects that were Tschingel East and Tschingel West, and then one in Saint-Imier, Mont-Soleil, and Adelboden. These were the projects. Thank you very much. Yep. My memory is maybe not working as well as yours. Thank you. Right. Let's go to the live stream now.
There are still a few open questions. There are two questions on the EBIT. One of the concerns. The EBIT guidance 2024. It's a question in English. I'm going to read it in English and then translate it into German. Alexis Weiller , Davidson Kempner. Could you provide more color about building blocks of the guidance? How CHF 700 would approximately split among energy, service, grids, and others. Also, herzlichen Glückwunsch zum sehr guten Resultat. So here's the German translation. Congratulations, etc., on the good results. Can you give more information about the guidance and the breakup? On the first question, the outlook, EBIT outlook 2024 and expectations 2025, 2026. We give a guidance for 2024, CHF 650-CHF 750, that is. And at the capital markets date two years ago, we defined an ambition, but we are not going to give a detailed guidance for the years 2025 and 2026.
But the guidance for 2026 from the capital market date 2021 or 2022 is still valid. And then the guidance 2024, the split among the businesses, energy, services, grids, and others. We give a guidance for the corporate company as a whole. And what will happen in the various businesses, we defined energy, services, and grids. Thank you. And Janik, that answers your question of Janik Kies. On the EBIT outlook 2025, 2026. Another question from the live stream, Alexander Bossert, UBS. Are there many projects in the pipeline, and what is the CapEx for 2024 and the following years? About CHF 500 million CapEx for 2024, about the same as in 2023. And the following years there, we will take the strategy as a basis for the further planning and will give you more information in November on where we're going in the further future.
And then yet another question for Alexander Bossert, UBS. In the live stream. How will the guidelines coming from the consultation process on system-relevant utilities? So what do we expect? There are some things that were taken over from the banking regulations on equity, etc. But with our regard, electricity companies, it was more about liquidity. So we will have to wait. What we know is that there will be more reporting requirements. That's what we expect, but the exact impact we'll just have to wait. Then yet another question here in the room, speaking about regulations and the regulatory framework. Could you give a top-level overview of the electricity market liberalization? That's a discussion that came up in the EU and nuclear power plants. And BKW position on the VAC in the Sunday papers a few weeks ago.
There was a discussion whether the valuation methods and calculation methods maybe would have to be adjusted. These are big topics, liberalization of the electricity market. This is something we are negotiating with the EU. The EU wants to have free access to the market, and consumers should be able to decide on the provider. This is nothing new, and some of this market is regulated, some is not. In Switzerland, we could customize a model that is in line with our needs. But there is some resistance against the liberalization among the smaller communities and the smaller utilities. We will see how this develops in favor of a liberalization. We think this has advantages for the consumers. It will also enable an innovation thrust in the company. Roaming, for example, could be possible. These are all topics that are interesting and that are a bit difficult now.
So these are some of the advantages that we see. Nuclear power plants, this is something that is being discussed again, yes. We do not have a change in our position. We are open to technologies. We will use technologies when they make sense, when it is feasible economically and politically. And if there are technologies working with fuel elements, nuclear fuel elements that are safe, we would look into that. But right now, we think we have many topics and issues that we want and need to work on. For example, the electricity gap in the winter. We cannot waste time there and invest in the appropriate technologies. So this is my pragmatic view of the situation. But sure, if we need to look at nuclear power, we will do that. And then how high should the profit be when it comes to infrastructure expansions? So we need capital.
We need to get the necessary capital in the markets for expansion projects. That's what we're talking about. That's a fact. We will have to invest billions by 2050. The VAC, if it is too low, we will not be able to move as fast as we want. That's a political discussion that will never end, the discussion on the absolute amount of the VAC. Then a follow-up question from the live stream. The increase of the VAC, what are the impacts on the income statement 2024? A question asked by Peter Gürtli, tax consultant. A positive one. VAC 2024, 2023 is not a big one, not a big difference, but it has a slightly positive effect. Are there any more questions here in the conference room? Not right now. We have two in the live stream. One by Roland Vetter, Praxis Alpha Partners.
Electricity prices at the stock exchange fell. Baseload for 2027 is currently at EUR 60 for Germany as against EUR 85 at the beginning of the year. What will be the impact on the profits of BKW if prices do not pick up? For the short-term future, we hedged electricity prices. This is what we discussed today. We did not see a direct impact there. We do see an impact in the short-term business, system services, for example. They're based on the new prices and not the very high prices of the previous year. There we see an impact. I could not give you an exact number. There will be an impact, however. And we want to be able to profit from the volatility of these prices, and the volatility will increase. And now a question by Christian Thriesen-Mortell.
How do you see the development of the PPA market before the background of falling electricity prices? Will there be a slow in growth? No, we cannot see a direct connection to the falling electricity prices. PPA, that's a topic that the regulators are pushing in Europe. They want to have more such agreements between and among the providers in Europe. So there are many structural reasons for a strong growth in the PPA market. There is a study that speaks of a big volume in Germany up to 2030. So this is all I can say. Thank you very much. Any more questions here in the conference room? Does not seem to be the case. Then we would like to thank you for your interest and your active participation at this year's Analyst Media Conference on the figures 2023.
We'd like to invite you to drinks, to an aperitif here in the room. Enjoy spring, and we'll see you on the 21st of August when we present our half-year figures 2024. Thank you very much, and have a nice rest of the day.