Good morning, dear listeners. Welcome to Auga Group Investor Conference. I'm Emilija from Nasdaq Vilnius, and I'll be moderating today's event. We will start with a presentation from the management, which will be followed by the Q&A session. Please be informed that this webinar is being recorded and will be available on Nasdaq Baltic YouTube channel. I encourage everyone to submit questions in the Q&A section at the bottom of the screen. You can submit them either anonymously or with your name. With that said, I'm pleased to introduce today's presenter, the Chair of the Board, Kęstutis Juščius. Please, the floor is yours.
Good afternoon, webinar participants. I'm Kęstutis Juščius, the Chair of the Board of Auga Group, and I today will present you the audited financial results of Auga Group for 2023. During this webinar, we will review the overall financial results for the year 2023 and separately the results of each business segment. Additionally, today I will present the outlook for 2024 and the status of Auga Group's strategic and unique technological projects. 2023 was a challenging year for Auga. As you can see from the slide presented, the overall financial result of the group in 2023 decreased compared to the previous year. The largest negative impact on the annual result was caused by the falling purchasing prices of organic products in the crop and dairy segments.
In view of this trend, the group has already decided in the middle of 2023 to cultivate the health of cash crop through the generated conventional agriculture to share the risks of being in one agriculture business. It's important to mention that despite the challenges in 2023, which shocked organic agriculture. All of the group segments were profitable already in the last quarter of the year. In 2023, the division Grybai LT, which is produced soups and preserved products, was sold and spun off from the group. The sale generated revenue of EUR 16.3 million for the group, but the result of the sale transaction does not fall under the group EBITDA because it's one-off.
It's important to mention Grybai LT generated slightly over EUR 1 million of group's EBITDA annually, so this EBITDA will not receive this EBITDA in 2024, but we received of our reduced EBITDA compensation with EUR 16 million of cash from spin-off of the processes. I want to present the main reasons why group's EBITDA decreased in 2023. The price impact on the revenue amounted to -EUR 8.6 million, attributed to decreased product prices compared to 2022. The sale of the 2022 season harvest resulted in a negative impact of EUR 4.8 million as grains are harvested in the autumn in 2022, but we sold later. Actually, in 2023, most of the grains are sold in 2023. And that market prices were lower, so that was generated a lot of negative impact in 2023, the harvest, which was produced in 2022.
Lower milk prices also affected the results, amounting to -EUR 2 million compared with 2022 results. As we can see from the graph, additional increased production costs compared to previous years had a negative impact on EBITDA too. Heat and drought during last years, spring and summer, resulted in decrease in yields of summer crops, leading to a lower EBITDA by EUR 2.1 million comparing with 2022. Mushrooms growing segment rebounded to historical levels after the energy crisis. This had a positive impact of approximately EUR 3 million on last year's EBITDA result comparing to 2022. OpEx had a negative impact of EUR 1.7 million on the EBITDA results, primarily due to one-off campaign to introduce new products in the market, sustainable product basket we just introduced it in 2023. Also, the negative impact is caused by increased employee salaries and higher administrative costs.
The final result, EBITDA in 2023 was close to EUR 1.5 million versus EUR 19.6 million in 2022. It's important to mention that upon the group decisions to convert part of the land to conventional farming, the group lost also some of the organic subsidies, which are not reflected here in the EBITDA bridge, but it had a significant impact on the result of 2023. Now, let's look now for different segments. The crop growing segment is our largest segment, which is generating our main gross margins in good years. So the result of the current season harvest decreased by EUR 1.1 million in the fourth quarter, mainly due to a lower yield of soya. Which is actually where partially not harvested because of very wet conditions in the moment of the harvest in the fourth quarter. And this is why we lost part of the yield.
Annual cost calculations where we at the end of the year we look through all the books and we are accounting all the cost and this is why some of the costs are allocated to point of harvest and this is accounted to -EUR 0.6 million. The result of current harvest season in Q4 was the highest compared to previous years. We are entering in the next year with significantly lower crop revaluation. So only EUR 1.5 million. Despite that we have much more hectares in winter crops at the end of 2024. We have 22,000 hectares versus 17,000 hectares in we had at the end of 2022. So and this is actually we look on the conservative way for the harvest. We're booking for this year or from next season crops. Decreased commodity prices had a major negative impact for segment results.
As you can see from the slides, sales results decreased by EUR 3.5 million due to previous season's harvest stocks sold in lower prices versus booked on the moment of the harvest in 2022. As I mentioned before, the group decision to convert part of the land to conventional farming resulted in the loss of some organic subsidies. However, the new subsidy programs are oriented towards sustainability agenda in the farming. Group companies participate in these programs. So the additional subsidies received for this partially compensated for the loss of organic subsidies. Organic commodity prices are stable and the recovering demand, which we already observed, could lead to better results for certain crops in 2024. We don't see any more negative impact from the lower consumption.
Opposite, we see that partially in the largest areas like Germany, consumer goods consumption already coming back to and there is a little bit already increase in the consumption. So this is positive and probably one day it will be converted to higher demand for organic commodities. There is also a price fluctuation in the conventional commodity products markets. If we will contract our grains, wheat, or rapeseed, which is actually we have now this kind of crops after winter plant after last year autumn planting, it could result up to EUR 2 million change in EBITDA. However, we have not yet entered in the significant amount of contracts and we don't have any conventional grains in the stocks because it will first time conventional grains will be harvested in the season 2024.
So we are in our accounting in forecast we use forecasting numbers from season 2024 and actually we're calculating in our budgets future contracts and MATIF-based prices, which are from September MATIF prices of 2024. If you compare with what we budgeted and what we have at the moment, so the last week was the lowest prices since many, many months. So still this is approximately up to EUR 36 per ton of wheat and up to EUR 20 per ton of rapeseed, which is actually can if you sell it onto today's prices it will happen lower impact and it's up to EUR 2 million. In summary, we expect organic product prices to remain stable or even increase as for conventional commodity product prices we cannot influence them.
We can only contract we can make only impact and be contracting when it will be favorable market conditions for contracting future harvest. It's important to note that this year we are cultivating significantly more winter crops, 20,000 hectares instead of previously 17,000 hectares I mentioned earlier. This is a result of our transition to conventional farming as where there was no possibility to grow high amount of winter crops in organic farming because there just there are no organic crops which you can do in rotation schemes, which we can plant here in Lithuania in organic way. In our assessment, the quality of winter crops at the moment is really looks good. The crops were sown in the time on time and properly maintained in autumn. The winter conditions were favorable for maintaining crop quality. Today we see that we can expect an optimal yield.
And of course, there is still half a year ahead of us before the harvest. But mainly, winter crops were much less sensitive to the droughts and temperature heat waves if it happened in spring season. As the Chair of the Board, I want to note today we are implementing our efficiency agenda in all our farming business segments. And we are conducting a review of efficiency of all working fields on the group level. If the review brings us to the conclusions that certain operations fall outside group average on their bad locations, bad soil, which is not possible to keep our rotation what we have planned and/or our results showing that these specific plots we are not delivering us financial results like the rest of our groups averages.
These land plots might not be longer cultivated and we can reduce our little bit operation size. We're reducing working capital and machine requirements to maintain the production volumes. But it will be not significant amount of soils. It is really below 10% anyway. It's not will happen once until it takes during one or two years. Dairy segment . In 2023, the milk yield per cow per day, this is how much we milk, demonstrated good performance, being 5% higher compared to previous years. However, we observe that this trend continues in 2024 and our productivity is on the good track. Although the average prices of milk commodities fell by 18% during 2023. Prices increased in November, December and stabilized now at the moment. Due to market conditions, we were selling organic milk commodities for almost conventional prices in 2023.
You can see it on the graph where we see the milk price here. So that's why we took necessary actions for season 2024. Firstly, in 2024 we negotiated with existing customer base regarding the increased price premium for organic milk and quantities of a part of organic commodities. And by fixing with a long-term contract. So we not accept in future selling organic milk with conventional prices. And that's what it was declared from our sides. And we ask our customers to choose what volumes. And we need to accept a price premium for organic. Because the way we produced higher cost products and sold on the regular prices it can't continue forever. So this was accepted by main of our customer base.
The rest, which was not accepted, we made the decision to turn to the conventional farming, which will in second quarter probably we will start production one third of our cows or 27% will be converted to conventional farming schemes. This milk will be not sold more with higher prices versus there exist on the market, but this milk it will cost at least 20% lower cost will be versus organic production. So in this case, we fixed the margin for consumers which would like to continue buy organic. If we not wanted to pay a price premium, so we reducing our cost turning to conventional. The volume of milk we produced increased in 2%.
So it's a little bit looks like that the sales is lower, but the lower annual sales volumes result from some of the production being used for a new AUGA dairy product line where we because this line is actually this presentation is telling about AUGA commodities, not about AUGA FMCG. AUGA FMCG is in different slides. As I mentioned earlier, the decline in organic commodity milk prices during 2023 was the main reason for decreased segment results through the year. Important to note that last quarter of 2023 was already profitable as Auga Group improved its milk yields, kept production cost under control, and as product prices rose already in November, December. We plan that in 2024 the gross profit will increase due to new contracts with customers and possible this transition of some dairy farmers to conventional farming as it was mentioned before.
This step would also create a positive effect on segments results and lay the groundwork for reducing production costs in future. Mushroom segment. Mushrooms are another important segment of Auga Group. We see here a positive trend. The price for mushrooms excluding transport and packaging was 12% higher year-on-year. This increasing price trend is also evident in 2024 where price reached over EUR 2,500 per ton in January. Production volumes were also stable and by the end of 2023 we were higher compared to previous years during the same period. In general, segment shows stability and recovering back from years when this was energy crisis have a major impact on financial results. Higher sales prices, controlled production costs, and low energy prices have led to the improvement of financial results compared to previous years.
The segment gross profit in the last quarter of a year was the highest compared to the other quarters of 2023. Finally, besides the segment operating steadily in 2024, it's important to mention that current market environment is favorable, allowing the planned gross profit for 2024, approximately EUR 2.2 million, to be implemented. Continuing the presentation, we will now review the FMCG segment. As announced to the market back in the summer of 2023, we sold one of our divisions, Grybai LT, a producer of ready-to-eat soups and preserved products. Although the segment operated profitably in 2023, the spinoff of Grybai LT resulted in lower overall segment result compared to previous years. Last year, we also took a significant strategic step and introduced to the market a new line of more sustainable organic products for the consumers.
Which is based on daily consumption dairy products as well oat flakes, oatmeal porridges, eggs, and vegetables. We are sold in major Lithuania supermarket chains and HoReCa channels. We see enlarging areas and spaces pickups where we every month- by- month we're adding additional customers. With this new product line, we aim to mobilize community of conscious consumers. Prioritizing more sustainable products, expand the range of products, and broaden the sales network for their products. At the end of this month, consumers will be reached by new our product line. Free kind of sustainable and organic yogurts. Outlook for 2024. In the third quarter of 2023, we announced that the EBITDA forecast for 2024. To the best of our knowledge, we do not see significant signals that would result in changing EBITDA for more than 10%. So we decided to remain the same.
Some of the segments could improve, some of the segments because of prices or commodities could a little bit be lower, but we don't see the difference which has impact more like 10%. Let's discuss about green infrastructure projects we developing last few years and we close finally going to final stage. So we continue our strategic direction and aim to demonstrate that the potential of sustainability initiatives can be successfully commercialized. Therefore, the three biomethane units have already been installed and this month the group will commence supplying biomethane to the national grid system. With the opportunity at hand, we will market the available biomethane resources to secure a new source of incomes, which will not be related to climate with droughts or summers. So we will convert AUGA farming residues waste to valuable source.
The cash flow generation out of our previous investments will start in next coming months. The group continues to develop its technological project as it preparing to scale this for their portfolio. In the last quarter of the year, AUGA M1 tractors continue to be improved based on the results of the field test we done in 2023. Additionally, the unique structure of AUGA M1 has obtained a patent in strategic global markets in the United States, European Patent Convention members, Australia. The obtained patents protect the group from technology copying and opening up possibilities for global commercialization in the future. It's also proving of our uniqueness in their markets. Not even being tractor producers, we can create something to the farming industry, which actually never done this was not done by big agriculture holdings and agricultural equipment companies.
As announced in the last quarter, half size of M1 electric multifunctional prototype tractor able to cover the remaining of their farming needs will be presented soon. It will be in one or two months' time, we will show to the market what does it mean this tractor, what we can do, and what structure and how it could be used in the farming operations. Both tractors are complementary technologies that will cover the full scope of tractors demand on the farming operations while addressing 100% of fossil fuel emissions. Another important technology of the AUGA group is specialized feed technology . In 2023, group achieved significant results. Our Lithuanian researchers validated the results of the feed technology testing and confirming their validity.
The results indicate that the technology enables a 13% increase in milk yield with no impact on milk quality and reduction of methane emissions by 32% per liter of milk produced. In the second quarter of 2024, after many years of work and investments. We will be able to see the value of our unique sustainable agriculture technologies we have developed. The way of technologies to the market will be announced in line with the planet financial setup in the second quarter of 2024. Group plans to apply for the EU Green Deal Industrial Plan schemes in second quarter in 2024. The program is already formed. There are already second documents requirements for applicators already published. According to the program descriptions, we see that we meet its requirements and can apply when it launches in the second quarter of 2024.
You can find the rest of the information regarding the share price and turnovers. Also, you can find our other information in our AUGA website. You can find also information in the Excel sheets if you wanted to calculate or count something. And there are disclaimers. And I will keep on the way to deliver food with no cost to nature and to be a synonym for sustainable food and lifestyle. So dear audience, I finished my presentation. Please, I'm open for your questions.
Thank you for the presentation. We'll proceed with the questions. I'd like to remind everyone, you can submit the questions in the question box below. We received some questions ahead of the conference. And the first question is related to the grain prices. The price of grain has fallen below the company's projections. Is profitable operation possible at this price? Does the company have enough resources to support a difficult year?
Okay, the prices for grains, like I said before, so we even calculated the impact. If you grow, if you harvest the grain today and we sell the grain today, so it will be up to EUR 2 million, the impact from our calculations, which we have budgeted for 2024. This is very same impact, but it's not significant huge impact for company operations. Another important thing that the company we don't have at the moment nothing from conventional for sale. So that is why maybe someone is mistake. We're not selling any conventional grains at the moment. And the price maybe today is really low, but the price for autumn is EUR 200, a little bit above EUR 200. And we have in our forecast EUR 236 per ton.
So the price is only EUR 36 lower versus comparing today versus today prices and if you take one week before it was EUR 5-EUR 10 higher. So the price difference is not significant.
Thank you. The next question is relating to the bond. You need to repay EUR 20 million bond this year. Will it be refinanced?
Yeah, the bond refinancing, yes, of course, it will be. It's planned to refinance bonds as planned. And there are no changes regarding this repaying the bonds in the end of the year.
Thank you. The next question. Why AUGA grain trades with discount to the market relating to slide 9?
Related to grains. So this is a few different prices. I don't know what it means, the discount. So yes, if you look on the organic grains, German prices and Auga's price, which you see. So it's our prices ex-farm, let's say. This is not a price which we sell because if you put on top transporting delivery to the cost of our main markets and these markets not here in Lithuania, but mainly in the outside of Lithuania, for example, in Germany. So the cost for transporting is sometimes up to EUR 70- EUR 80 per ton. So delivered the price will be lower difference. The lower not so high the difference versus you see on the graph. So this is why these prices, you see, the big gap on organic prices.
The conventional prices which you see on the graph, so it's not related with the existing business at the moment. So because it will be for more or less to see in future how the prices looks like historically.
Thank you. Could you please comment on the situation with covenants?
Okay, so yeah, so this is of course with this financial results we were breaching the covenants with our banks, but our bankers and financial institutions, we everyone understands and accepts that you know could be there could be how to say difficult years. But we had the agreement with banks and no one financial institution they don't have any how to say postponing our or let's say whatever it's recalling credits or lines regarding their covenants. There is agreement with every financial institution.
Thank you. What is the outlook on yields and crop and dairy segments? Could we expect an improvement in gross margins going forward?
Yes, like I said before, so with opening you know so this is in past when we were 100% organic, so we just can do what we can. So we can sell we produce organically and say look we we can't we have any choice. So and this is how we can perform. That's why sometimes our customers and sometimes used the situation and we and we had a price which is was very little price premium for for organic produced products. And now we we have a choice to to to use both schemes, organic and conventional ones. We can choose for better solutions and decisions, business decisions. And this will provide to better economic results for sure.
That's why we're saying sometimes that maybe one place in the prices of commodities will be a little bit reduced so we can upscale and a bit this dairy segment, which actually maybe it will not show exactly in first quarter because we just start probably for from second quarter of this year. But in general long term, so we will generating by far in the same market conditions we're generating better gross margins and best better profitability for dairy segment.
Thank you. How do you plan to finance the ongoing operations in your business segments and in AUGA Tech specifically?
Yeah, so this is we are operating like a farming. We harvesting our crops, we filling our warehouses, we're selling later crops from our warehouses and stocks, and we do also milk produce and mushroom growing, so this is daily operations which we financing from incomes we receive from our sale products of sales. And yeah, this is not easy. So yes, this is because we of course that after that bad year we have not so easy for us to operate in the best way, but for long term we see that this business of technology business need to be separated with cash flow and with external financing of our technology to developing.
So that's why we published that in second quarter we wanted to show to the market and to get financial separate financing for technology and scaling technologies.
Thank you. The next question is also regarding the bond. Do you plan to refinance the bond by issuing new bond, by bank financing, or other options considered?
Yeah, so this is we not if we anyway we're going for refinancing bonds. This will be a second part of a year that will be already our financials improved on the market and by seeing our crops how it will be performance on our crops and how what amount we need what amount we can arrange from our existing operations and actually this is conventional farming allows us to produce more goods and to sell more goods in the autumn in 2024.
And then we see that demand we need we can we will make a final decision how are we going switching to the banks which is also possible or we're doing arranging bond issuance program and the how big will be a bond issuance program relates with a little bit what will be market and what will be harvest and what will be market in the capital markets and the second quarter of next year this year sorry.
It looks like we've covered all the questions so far.