Afternoon. Dear listeners, welcome to AUGA group meeting with investors. I'm Emilia 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 for a rewatch.
As always, I encourage every 1 of you to share your questions in the Q&A section at the bottom of your screen, and you can submit them either anonymously or with your name. With that said, I'm pleased to introduce today's presenter, Chief Financial Officer of the company, Mindaugas Ambrasas. Mr. Ambrasas, please, the floor is yours, and good luck.
Emilia, thank you for the introduction. Good afternoon, ladies and gentlemen. As always, thank you for joining the webinar. As presented, my name is Mindaugas. I will try to give you a little bit more information about what AUGA group were doing last year and what are our financial results and latest developments for the year. For the start, just a short reminder what the group is doing.
As there were no major changes in our activities last year, maybe let's move to the overview or overall results of the group for the year 2022. I would say there are several key outtakes from those general and main figures.
That, I would say that the group had rebounded from very difficult year 2021. As you can see from our presentation or from financial report, we published a couple of days ago, we improved, I would say, all key financial indicators. In terms of revenue, gross profit, net profit, or EBITDA, it was substantially better comparing to the last year.
Though we have positive changes in our results, I still have to say that 2022 was quite challenging year, I think not only for AUGA group, but for all the businesses because of all those geopolitical situation, you know, we had positive effects in terms of our businesses, because prices of bigger part of our products has increased substantially.
From other side, the cost side had increased substantially as well. Just as a fact, last year, we spent more than EUR 7 million more comparing year-over-year on cost, on fuel cost and energy alone. That was, you know, positive development from 1 side, but it also had some negative sides as well.
Because of that, at least some of our segments, they were really hurt from this situation. For the last couple of years, the group really spends lots of time and resources, and we talk a lot about those technological developments we are currently doing.
For financial results of year 2022, still there is no impact on our financial results from those things we are doing. I really believe and I hope that next year when we will be talking about our results for 2023, we will already be able to say that from all those things we were doing, finally, we have some positive effect on our results and profitability as well.
As always, I would say let's go from segment to segment and discuss those segments a little bit more details. As always, we start from crop growing activities. When we talk about crop growing activity, agricultural side, usually there are no, I would say, significant changes in the last 1/4 of the year because there are not so much agricultural activities going on in that 1/4. This year was a little bit different just because of all those turbulences we had and the substantial changes in cost side at least.
This year, however, we had a negative result in initial recognition of biological assets at fair value in the 4th 1/4, as you can see from graph in the presentation. It happened generally for a few reasons. First of all, we did an extensive review of costs at the end of the year because some of the things we are doing, final figures are not clear till the end of the year.
We still have to use some forecasts, closing agricultural season at the end of the 1/3 1/4. When we did those final calculations, at least in some areas, costs, actual costs were higher comparing to the figures we forecasted and planned when we did the calculation at the end of the 1/3 1/4.
There were also some changes in allocation of costs for the season. Generally, more costs were allocated for 2022 season comparing to the next year. This was 1 of the reasons. This cost review was 1 of the factors which had this negative effect.
Second was how we value harvest for the next season. Generally, if you remember our methodology, how it's done. At every point of time, we calculate what could be the value and what could be profitability of our existing harvest. Then we do this at the end of the year. You know, this year, I think we were more conservative on our assumptions.
As you can see from the graph in the left side of the Slide, this year we booked the lowest gain in the last 3 years. Generally, I would say from 1 side, we really want to be more conservative in our assumptions when we see how our assumptions were realized in the last couple of years.
Secondly, of course, there are developments in the market which also changes our assumption. That's why we also did this revaluation of next year harvest. This at the end also had this negative effect on gain of biological asset value. Despite that, this of course, had some negative effect on overall result of agricultural activities.
Still, if we look at overall figures for the year, it was substantial improvement comparing to the last to 2021. As you can see, gross profit for 2022 was more than EUR 12 million, and we had almost EUR 1 million of gross profit a year ago.
To sum up, our agricultural activities, I would say that in terms of crop growing activities, 2022, you could say it was average in terms of yields. For some of the crops, the year was quite good, for example, beans. For some of them, for example, summer crops, it wasn't really. Or even it was below the average figures we had in our group.
At the end of the year, I would say that, in total, if you need to value your yields, so it was an average year. Of course, high prices, commodity prices, really helped to improve the result. From another side, costs, there was a factor which really drove result lower.
What I would say is a good development last year. Our sales activities, they also showed some improvement comparing not only to year 2021, but also 2020. As you, as you can see, a result of sales of agricultural produce, there is EUR 1.9 million loss last year. It was an improvement comparing to the results for the last couple of years.
From 1 side, everyone could argue that it was a little bit easier for our salespersons just because of a trend in the market and the prices were growing, so of course, it's easier to get better result. I believe it's not only the trend. I think, we are a little bit more transparent in those activities. We pay more attention in storing, our harvest, so we have less write-offs. This was also the reason why this result improved. At the end of the day, as I said, we have a gross profit of more than EUR 12 million from crop growing activities in 2022.
At this point of the year, we also talk about situation with the harvest and the situation in the market for the next year, because I think this is also very important, and it also affects the results in the future. If we talk about crop growing, in terms of area of crops, there is no major changes in crop portfolio.
In total, we have slightly more hectares for cash crops. Potential for revenues is a little bit larger because we will have less hectares used for forages. In terms of winter and summer crops situation, I would say is very similar to the last couple of years.
It's very difficult now to talk about situation with the harvest because as you can see, at least in Lithuania, in Vilnius, there is snow outside. It's difficult to really make a judgment about what is the situation of our crops currently.
If we look at our preparation works, sowing process went really well. In general, this mild winter shouldn't have a negative effect on situation of crops as well. I would say at this point of time, there are no threats that we should have to do resowing in the spring or the crops could be somehow damaged. Situation is I would say quite good at the moment.
I think a much more challenging situation is in terms of pricing for commodities. Here it's quite difficult to predict what situation, how situation will continue this year. As always, we're using the same graph for organic and conventional wheat price in Germany.
I think you all know latest developments that yes, for year 2022, we had quite substantial increase in prices for commodities, not only conventional, but organic as well. In 2023, the trend is changing, and for the last couple of months, we see that prices are slightly decreasing. I would say that in or at least organic market, there are still lots of lots of uncertainties.
I mean that, yes, there is a pressure to decrease the prices, though we have quite a lot negotiations, there are still quite a small number of actual agreements in the market. I'm not talking about our group only, but the market in general.
I think all market participants, they are, you know, trying to understand how the market will continue in the future and how situations will change in the future. If even you look at the graph, the highest prices we had last year, we had when we were selling remaining part of last season's harvest, so first 1/2 of the year. Prices after the new harvest was harvested were a little bit lower.
I think now you to talk about prices for remaining part of last year and harvest, it's 1 thing, but how the situation will be when the new harvest and what quality new harvest, what amount of new harvest will be, it's very difficult to predict.
Here, I would say, currently, you know, we are starting to work with the first agreements for the next year. Situation, as I said, it's lots of uncertainties, and I think it could change. You know, prices could go a little bit lower as well, but there are also arguments, and we believe that definitely the prices will not go on the level we had a couple of years ago because there are lots of reasons.
Pressure from the cost side, as 1 which will keep at least some level of prices intact. Dairy segment, if we talk about this segment, I think situation is a little bit more easy, because really, it's the same situation we were talking about for the last, I think, 4 1/4s.
Generally, we are really pleased with our results for the year in 2022. As it was already mentioned a couple of times during our presentations that, yes, we had some challenges in production, but high prices of raw milk was, I would say, a really important factor helping to improve results in dairy segment.
As you can see from the Slide that, you know, milk price grew by 28% for full year, and at the same time, cost increased by 13% only. This led that gross profit to, you know, improve substantially for the segment from almost EUR 1 million a year ago to EUR 2.6 million last year. It really becomes more tricky to talk about our expectations for this segment for 2023.
I already mentioned, and we talked about this a couple of times in our previous presentations, that in 2022, we had this drop in our yields, and the reason was very poor harvest in previous season. We generally had to change our feed structure.
We mentioned a couple of times that with the new harvest, we expect our yields to rebound, and that's what actually happened, as you can see from the graph. In the last few months of the year, with new harvest used in the field of cows.
Generally, we already are in a level of 2021 in terms of yields. Here I would say we have some positive developments. If we talk about the prices for raw milk, here very similar situation to crop growing. Generally, we have really quite a few questions how the situation will continue because same situation with the crops that for the last couple of months, there is quite substantial drop in terms of prices, raw milk prices.
This, of course, will have negative effect on our results for 2023. It's very difficult to predict what could be the final result because I would say that it's still unclear what could be pricing level for milk for this year because it's still quite fluctuating.
You know, we had some drop in the first 2 months. We could see some small rebound in the 1/3, but still, we can't use conventional prices because in terms of organic prices, our increase of prices, as you can see from the graph, was lower. We also expect that maybe this negative development also will take time and will not to be as substantial as in the conventional market.
At the end, as I would say that, yes, changes in organic milk prices or milk prices definitely is a challenge for us. I believe that it would be extremely difficult for us to reach results we had last year. 1 of the areas where we could see upside and maybe compensation of those decreasing prices. As already mentioned, yields.
We generally already picked up and increased the level of yields and reached yields of 2021. Hopefully this will continue, and this will be an upside comparing our results for next year with our historical results for 2022. Mushroom growing, really, I would say there is not much to talk about annual results because really bad. Sorry.
As you can see from presentation or as you can see from reports, we had the gross loss of EUR 1.4 million from mushroom segment in 2022. It was already described couple of times during our previous presentations what was the reason of those worsening results of the segment.
First of all, last year we had very substantial increase of costs in the mushroom growing segment. I believe this was the segment which was really hurt the most in terms of business segment from those increases in energy prices, because it was increase of almost 65% or EUR 2.3 million comparing our costs year-to-year.
We are using quite a lot of, for example, electricity because we need to keep humidity and temperature in the facilities where mushrooms are growing. Generally, we need to do a lot of cooling during the summer period.
The 1/3 1/4, when we had the highest energy prices, there is the highest demand from our side for energy consumption. That's why, if you remember, the 1/3 1/4 was really bad in terms of financial results. Secondly, yes, there is a process going on when we are increasing the prices of our products in the retail market, but it really took some time.
If we just check overall increase through the year, so it was, you know, it was delayed and the effect from increased price came later, and that's why this result was worse than it could be if the changes in pricing were executed a little bit early.
The 1/3 factor, and this problem really continues for some time already, that I would say our production capacity is not fully used. We had several reasons in the last couple of years why our production volume was not optimal. Now, in the beginning, you know, we had some challenges related to COVID, we had some challenges related to high temperature, and some of those problems, they continued last year as well.
I think the new, the new reason, and the new argument was that the very high energy prices, we also had to change our production processes a little bit in order to save energy. Unfortunately, this also had an effect on our production volumes. At the end of the year, as I said, this resulted in some negative results for the year for the segment. Not to end with this very negative note, I would say that we are quite. Or maybe we see a light in the tunnel for this segment already because if just to check financial reports.
In the last 1/4 alone of the last year, we already made a gross profit and this situation continues in the first month of 2023. Generally what happened and why we see that the results are finally improving in the crop growing segment.
First of all, this largest driver last year, energy costs, they decreased and I would say they are stabilized already. You know, we have some schemes for support compensation. Generally market situation is much better. Generally current energy price level is not hurting as much as it hurt us last year. Secondly, and I think this is maybe the most important factor, is that though, as I said earlier, this price increase was delayed, but slightly and stably, we were increasing prices.
If we compare prices in the first 1/4 and in the 4th 1/4 last year, we have a 16% increase. This was 1 of the key reasons why we really see improvement in the financial results for the segment. In terms of production volumes, as you can see from the graph, yes, we're still not in the optimal production situation.
I think this is the largest upside for the segment and for AUGA group for further improvement of results. If we would be able to reach this optimal production volume of 1,000 tons per month, we would be really on the same historical level of profitability the company were operating for many, many years.
I think that first few steps are already done and first few problems are already solved. And as I said, the results in the last 1/4 last year and the results in the beginning of this year, they really give some optimism moving further. FMCG, if you remember our presentation for about 6 months results, I was talking that we are somehow Pessimistic about results of the segment because the growth was what we planned couldn't wasn't reached.
Second 1/2 of the year really changed the situation. And as you can see from the graph, we had extremely good 1/3 1/4 in terms of sales, and we had almost the same level of sales in the 4th 1/4 as well.
The second 1/2 of the year really catched up, what was not achieved maybe in the first 1/2 of the year. If we look at the final results of the segment for 2022, I would say that we are quite happy with increase of sales by almost 31%.
Yes, our expectation was to increase profitability more as well, but there are several reasons why this was not achieved in 2022. The same situation as with mushrooms. It takes time to change prices, and the cost increase was quite rapid. That's 1 of the reasons. Secondly, we are planning, or we already launched some new products, sorry.
Of course, this preparation had some additional costs, which also maybe decreased our profitability in 2022 a little bit, but it also gives us potential for further improvement, not only in terms of sales, but in profitability as well, in 2023.
Just as an example, we're really introducing a new product category, ready-to-eat grain and curry bowls, which you already can find in our key export markets, USA, Germany, Poland, and I think in the Baltic countries in nearest future as well. Maybe this was also missed, I think, very good achievement for our FMCG business was that starting from second 1/2 of the last year, our growth of sales or our sales in Germany increased substantially.
I believe now Germany is the Second-Largest export market in our FMCG segment because that was always a goal of ours to, you know, to find a niche in EU markets. It was somehow always a little bit more difficult.
We were much more successful reaching US market, other countries. Now I would say we all finally have substantial sales in major EU market that is Germany. This is also quite a good achievement in FMCG segment. As always, just to sum up those developments we had for the year. Where the biggest changes in terms of EBITDA came.
It's obvious, I think, from the presentation that we had a really positive development in agriculture and dairy. Mushrooms was the segment which really was hurt and then had a negative impact on our changes of EBITDA year-over-year. It's related mainly to our OpEx expenditures. This was also 1 of the areas which required review and where costs had to increase just because of overall situation.
This was also 1 of the drivers for decreasing EBITDA level for the year. In every presentation for the last, I believe, couple of years, we give investors an update on our technological developments. I think this is the first time. You know, I can say that at least some of the projects were already finalized.
I think, and I hope that you had the possibility to participate or to watch introduction of first tractors which were produced, and this project. The first batch of 3 tractors was completed, and the tractor was presented in February this year. We have slight delay with other projects just because of logistical issues, constructional processes, et cetera.
We still have a plan that the first biomethane production facility will be fully operational from April this year. As if you remember, we are planning. We will have 3 facilities. Generally, you know, first is in April, second is planned to start operating in May, and the 1/3 in June.
As was mentioned in last presentation, theoretical production volume of those 3 facilities is 63,000 megawatts of biomethane. It's complicated calculation, so biomethane is calculated in energy megawatts, but that's like alternative how much biomethane can be produced in those facilities. We still continue our testing and development of specialized feed technology.
To continue with this information, I fully understand that investors, you know, are waiting for quite long time already for more information about commercialization of those projects. You know, how those projects will be developed and how they will be implemented.
What I can say today, that group is really working on the plan, how, first of all, these technologies we created will be used in our operations and how these technologies can be used in agriculture in general. Secondly, what impact, financial impact, from those changes will be on our financial statements. Obviously we still need to finalize the plan.
We need to make a decision and then the decision will be made. Of course, all this information will be provided to the investors. My guess is that in the second 1/4 of this year, we will be able to come up and provide more information and more detailed information on those plans we are currently working on.
As always, it's just information about our share performance, 3 companies which are following us, and here you can always find the more detailed information, financial reports, numbers in Excel format, and so on. That was the presentation, and I believe now we can move to the questions.
Indeed. Thank you very much for the presentation. As we're moving for the Q&A session, I would like to remind all attendees that you can send in your questions in the Q&A box of your screen. Let's begin with the first question, which is as following: How do you see your debt structure and debt portfolio? Are you preparing a plan how to refinance bonds? How you see refinancing risks and prices in bond market?
Thank you for the question. Maybe it's just 2 parts of the question regarding our debt portfolio. I think we obviously are aware that if we talk about leverage of the group, you know, it is on the higher end. I think it was already mentioned by the management of the company that if we talk about commercialization of those new technologies, we fully understand and we don't plan that all those investments will be financed by additional borrowing.
First of all, we believe that, you know, this will not be needed, but we also, you know, need to understand and find a way how to do it in much better way for the company. You know, we are...
This part of the plan I was mentioning, we are working on the ways how to attract additional investments. We are working on ideas how to do that and how to structure that in order to have a structure in place and possibilities for those who would be interested in such investment to do this. That is the reason why we are changing our legal structure of the Group.
It was already mentioned in some public announcement we did a couple of months ago. Generally, we are trying to make our structure more transparent. We want to separate different business units and business activities. All technological activities of the Group, they are already concentrated in the new company, AUGA Tech.
This would be the way how we can make those investments without creating additional risks in terms of increasing leverage even further. Second part of the question, if you talk about the bonds, you know, we still have 1 and a 1/2 year to go before refinement or end of the current bond program. Of course, maybe it's very difficult to predict what would be the situation and how the market react.
We believe that we still have quite an attractive offer for current bondholders because, you know, in terms of pricing, in terms of securitization, in terms of activity of the company. You know, we believe that this is attractive offer for the investors.
You know, we also doing some homework to prepare for this moment as well. The same structural changes is also 1 of the reasons why we are doing because we believe that if we have more transparent structure, we can show to the investors results of different activities.
If we talk about daily business, if we talk about crop growing business, if we talk about latent management business. This will create additional benefit and will give better opinion from potential investors. Secondly, I think which is also very important factor for us if we talk about refinancing of bonds.
If we look at investors of our bonds, generally, I would say absolute majority of our investors came from Baltic countries. I think that's why we don't have the risk that if you have investors from the markets which generally are not that active in the Baltic market anymore. You know, local investors provided the financing for our group, and we believe that, you know, this demand will be there as well next year if we will have to do the refinancing.
Thank you very much for your answer. How do you see group's liquidity position?
Okay. It's like very, very generic question, and it's very difficult to answer because I think every company could answer that the liquidity position always could be better. But on the serious side, I think we had very similar question during the last presentation we had. Maybe I will just repeat my answer. First of all, agricultural agriculture really requires a lot of working capital.
Organic agriculture, it requires even more because generally our business cycle takes almost 2 years. You know, for 1 year we are growing everything, for the second year we are selling everything. We don't sell to the traders, but we have to sell to final consumers. Generally we have to so-store, we have to deliver, and so on.
Of course, working capital and liquidity is always very important factor and it's always area we need to focus and manage. In the last couple of years, first of all with our, you know, poor financial results, and secondly with increase of costs, you know, this area, I can't say it become even more important because it always was.
This is always area we need to focus and work on. Generally with our resources, with our suppliers which also provide some financing to all agricultural entities, at least in Lithuania, financial partners, we are working on that. I think that could be the answer to this question.
Thank you very much. Let's move on. What is the strategy of going forward in terms of eco-farming? Group had strong results only because of favorable commodity prices. Usually performance is weak.
Okay. Thank you once again for the question. If we talk about the strategy, I would maybe ask for a little bit more patience. As I said, I understand that every time I'm meeting some of the investors, you know, they are always happy to talk about, you know, our view on organic farming, on those technological developments.
Everyone is asking, you know, "Could you give more figures?" You know. "What you're planning to do with the tractors? How much you will earn from that," et cetera, et cetera. As I said, in the second 1/4 of this year, a detailed plan should be presented, and I think this plan will give the best answer to the strategy going forward.
Thank you very much. Looking at upcoming harvest and falling wheat prices, how do you see the upcoming crop results?
It was already discussed during the presentation, so maybe I'll just very briefly to repeat myself. You know, first of all, it's quite difficult to predict what would be actual prices, then there will be new harvest in place. We will have the biggest impact on our financial results. Definitely current situation, when the prices are decreasing is not like the positive 1.
I would say, first of all, there are too much uncertainty to make predictions. Secondly, we still believe that if we will have this drop, and we already having this drop in prices, so our prediction is that we still will be on quite a higher level in terms of prices we were a couple of years ago.
Mm-hmm. Thank you very much. I'm sorry. Just a second. Okay. What exactly pushes down the prices of raw milk in the Baltics? The news seem to be quite dramatic regarding the dairy farmer profitability.
I wouldn't say that this is some exceptional situation in the Baltic zone. Generally we see a similar trend in Germany, for example, as well, in other European countries, Poland. You know, if we talk about the prices, answer is very obvious.
Demand is lower than the supply. That's how this current situation is. Maybe, you know, it will be very difficult for me to go into very details and explain how the whole dairy market works. Overall, currently, we have oversupply in production. It's just a question, you know, is it very temporary situation? How the situation will change in the summer when the cows will leave farms and usually and historically there is a seasonality then milk production increases.
It also depends on the situation in the market, because, you know, Baltic countries are really, I would say, our dairy producers, and I mean, processing companies, they are working not in the local market only, they're exporting quite substantial part of their production. Generally, the situation in the export market improves. Then we could expect improvement in production of raw milk industry as well.
Thank you very much. As I see that we have 3 questions remaining, I would like to remind all the attendees that you can send in your questions in the question box of your screen, and I will voice them out. The next question would be as following: In Q4, the interest expense decreased by more than 50% year-on-year. Could you please give reasons behind this decrease?
It's a little bit technical thing, and it's obvious that maybe we had to provide a little bit more information in our annual report, and we definitely will do that in our audit reports. Generally, our interest expenses, you know, they consist from several parts. It's like normal interest expenses, what we are paying to financial institutions.
Where no decrease in this line if we compare year on year. I would say even, it's different situation. Generally, we are paying more interest to the financial institutions just because of higher interest base. There is IFRS 16 effects. Generally, you have interest for your rent assets.
This 1 was also had the same interest what we had previously. At the end of the year, we also do some remodeling of our IFRS 16 obligations. That's where this, let's say, positive impact came from which decreased our interests just if you look at the overall figure. If we divide it and divide it into the parts, so generally we have this, you know, we don't have this decrease as it was mentioned in the question. This change, remodeling of our liabilities is generally done at the end of every year.
As I mentioned, maybe during the presentation, that some of the models we did at the end of the year, last year, we had some substantial effects just because of this quite extraordinary year we had and all those changes in our cost level, interest level.
This also had an effect on the financial results as well. Hopefully this answers the question. Thank you very much. Other cash crop yield was much lower than forecasted. Could you please explain why?
The biggest reason that we tried some new projects with some new crops, and I would say that, you know, our expectation and forecast was as mentioned in the question, was much higher than the actual results. You know, this could be for several reasons. First of all, it's a new projects we are doing and new cultures we are growing.
Maybe, you know, we don't have that much experience and knowledge about that. Secondly, maybe just because of some weather conditions, the harvest is lower than forecasted. Just because of lower yields because of the weather. That could be another argument.
It's difficult to say because as I said, it's quite new projects and we don't have history to make a full clear judgment what of the reason behind the lower than forecasted results.
Thank you.
To elaborate on higher costs, I think I already mentioned during the presentation what has changed if we check figures in the Q3 report and the annual report. I think that was all the answer.
Thank you very much. Could you please elaborate on 38% higher cost per hectare for wheat?
Okay. I mentioned this already. I think this was already discussed during the presentation, so.
Okay. Thank you very much. It seems that we have the last question for today, which is: what are the main challenges for the year 2023?
Okay. It's the last question, but not the easiest 1. I think, you know, there are lots of challenges. Of course, there are lots of opportunities. If we talk about challenges, of course, those latest developments in the market in terms of price, there is 1 area we really need to follow and react. Because of course, high prices last year were really helping us to improve our results. This is 1 area to follow and then to react, as I said, in terms of what we are doing, our cost level and so on and so on.
Secondly, if we talk about mushroom business, I really think that for the last couple of years, we had those continuing challenges in our production processes. This is really, and I really hope that this will be the year when we will manage to solve them finally and get back the company to the level of profitability the company was operating for many years historically.
I would say I'm quite optimistic about our potential for growth in FMCG business, because, you know, we are expanding our customer number. As I said, we are entering new markets. We are increasing our product portfolio. This could give us some optimism for the future.
If we talk about the challenges, because the question was about the challenges, I think that those technological developments we were doing, you know, tractors, biogas, this from 1 side is really the thing which will require additional, I don't know, resources to really start commercializing. From another side, this also gives us opportunities as well.
You know, as I said in the very beginning of the presentation, for 2022, we didn't have any impact from those research and development activities we were doing for the last couple of years. I really hope that in 2023, finally, we will at least have something to show. Something to show not only what we did, but also show in our financial reports.
I'm sure that, you know, this year we will already will have... okay, it's minor effect, but, you know, free tractors. Okay, if we even don't talk about further development, you know, free tractors you've been using in your activities, so you are decreasing some maybe costs in rent of tractors from 1/3 parties.
More importantly, our biogas facilities, they will start generate biogas in the second 1/4 of this year, and we already in talks to sell this gas to the consumers. You know, this will have positive impact on our results. You know, we could be another positive effect that we there is no market of green gas in Lithuania, but then there will be a supply.
We really believe that this will create the market, and this could be additional earning opportunity for AUGA group, green certificates of gas as well. Even if we talk about our core business, agricultural business, this biogas facilities could have a positive impact on our agricultural business because we are using the same fertilizers, manures, but they will be produced, and we will have it in liquid form.
The digestate, so generally, you know, theoretically, this could give better results in terms of fertilization and better output for our crop growing operations as well. You know, I started from few challenges, and of course there are quite a few of them, but we also see some opportunities for 2023 as well.
Thank you very much on this last comment. As all the questions are answered, on be1/2 of AUGA group and Nasdaq Vilnius, thank you everyone for joining us today. Dear management, thank you very much for the presentation and the Q&A session. As always, the recording will be available in the Nasdaq Baltic YouTube channel. Have a good evening, everyone, and goodbye.
Thank you.