Good afternoon. Dear listeners, welcome to AUGA Group meeting with investors. 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. As always, I encourage every one of you to ask questions during or after the presentation in the Q&A section. If you want to ask the question anonymously, please select Anonymous Attendee box before submitting. With that said, I am pleased to introduce today's presenter, Chief Financial Officer Mindaugas Ambrasas. Mr. Ambrasas, please, the floor is yours, and good luck.
Thank you, and good afternoon to everyone. Welcome to the presentation. As always, thank you for your time. As Emilija already introduced, my name is Mindaugas. I am CFO of AUGA Group, and I'll try to tell you a little bit more how AUGA Group is doing in 2022. I think we can start. In the beginning, I should say that, you know, I'm feeling much better during this presentation today than I was feeling for the last three presentations because it's not a big secret the company had quite a tough year last year. You know, it's always difficult or tough to be a person which gives those bad messages.
From this introduction, I think you also understand that we are much more optimistic about our results this year. If we move to the slide and to overall financial figures for the first quarter, you can see maybe why. Of course, sales of the group decreased by almost 10%, and now EUR 17.5 million for the first quarter. It's really mainly affected by our poor year last year. Due to lower harvest, so generally we had less stock to sell for 2022, but the result of poor harvest was already booked in 2021, and now we just left the technical sales operations.
If we talk about our gross profit, EBITDA, so here we already see results from our activities in 2022, or the harvest we are planning to harvest in 2022. Here you can see I would say nice rebound from really poor results last year as our gross profit increased by 25% and reached EUR 5.76 million. EBITDA also increased by almost EUR 1 million and EUR 6.7 million. This I would say the biggest impact in this positive development comes from our agricultural business Crop Growing segment, where significant increase in commodity prices really has a positive effect on our value of planned harvest and financial results as well.
As you can also see from the slide, we also understand that, first of all, agricultural business has lots of uncertainties, and the weather is the most important one, because even last year we also had the situation when we were quite optimistic about our harvest potential in May, but June and July completely changed the story. Additionally, this year, I would say we have even more uncertainties. Everyone knows about all those things which are happening in Ukraine. Changes in prices, quite significant increase in costs, of course, also has an impact, and we have to follow this.
As always, I would suggest to go through segment by segment and to discuss or to tell you more about latest developments in every segment to have better understanding what is happening. As always, let's start with Crop Growing. Our largest segment, and I would say most important segment, which still is responsible for biggest part of our results. You know, if the segment is successful, usually we have quite a good year. Unfortunately opposite, if we have very poor harvest as we had last year, it also has a significant effect on overall group results. In the beginning of the year, if we talk about Crop Growing, you know, we usually have to talk about assumptions more.
You know, how we see our crops are looking, what is like the price level for future harvest, et cetera. If we start from the first factor, you know, what is the condition of the crops, I would say that we are quite happy with condition of the crops for today. Because all the things we had to do, sowing in autumn, was done as planned and weather conditions were really suitable for that. Winter went really well. As you can see from the slide, only 4% of winter crop area we had to resow, which is like normal process, but this percentage is really on the lower end if we compare annual results in previous seasons.
Winter really went through quite well for the crops and all the spring work, sowing, other things we had to do with the crops also went according to plan. Generally, all the things we had to do, we completed in time. Overall, as I said in the very beginning, the conditions of crops is really good. Another thing, which maybe is a little different from last year, due to changes in crop rotation, our feeding plan, this year we have a situation when I would say, we have larger proportion, so-called less risky cultures.
Because if you remember last year, legumes were the crops which really affected us most and where we suffered most because these are the crops which they could give you either very good yields and, you know, you could have very good financial results, but also this fluctuation of results is very, very big. If weather conditions were like we had last year, the yields could go by 60%. As you can see from the information, this year due to those things I mentioned before, we have a situation when so-called less risky crops they account for bigger proportion of the crops. This is yet another argument for optimism from yields perspective and the future harvest perspective. Another important factor, of course, are prices.
Here I would say we have very positive developments. I don't think we need to go into details because I think everyone knows that commodity prices may risen very sharply for almost all agricultural commodities. If we go to our statistics, because we don't have market price for organic commodities, and we see very similar trend in prices. When this increase of prices started in the end of last year, the trend continues. If we compare the prices we are having today with the prices which were a year ago, we have very, very substantial increase. Of course, I have to say that, and I have to mention that the prices you see on the slide is for existing harvest.
Generally, in Germany, you could get like EUR 550 per tonne for organic wheat if you're selling right now. Futures contracts may have slightly lower prices, but still, comparing to the levels of prices we were having last year, the growth is really substantial. This quite a big change in the market, I would say, created some confusion and how it affected the market. Generally, we had a situation that due to very rapid and very significant growth of prices, market participants they were somehow confused and were not like willing and waiting before making a contract for new harvest.
That's why we always said that we have a plan to contract 30%-40% of our forecasted harvest by the end of Q2. This process usually was starting in March. This year this process was somehow postponed and delayed. It's already in progress. I would say that, you know, this was also quite beneficial for us because this trend of growing prices continued. You know, as we postponed making new contracts for future harvest, so, you know, we were in position when now we are making contracts, future contracts for the harvest in autumn this year with higher prices which generally risen in the last month or so.
If to be more specific on the situation and how the contract situation is for AUGA Group, as from yesterday, we had contracted almost 40% of forecasted harvest for 2022. If you remember from our previous presentations, generally, we could divide our harvest into two categories. You know, smaller part, almost 20% is grown where we have long-term agreements in place. Generally we are growing some specific cultures and have long-term cooperation with different pricing. If to exclude such contracts and take into account this normal harvest we are trading every year, at this point of time, 90% of such forecasted harvest is contracted.
I would say that we are still working on some additional contracts just to be in the position where we would like to be in order to mitigate some risks in terms of sales, but also we'll be on the safer side that, you know, we would be able to fulfill our contract obligations if something happens with the yields. Most important thing, as I said, growing prices, they also created a really good environment for us in terms of contracts we're making. As you can see, all those contracts we already did, on average, selling price is higher by 51%, compared to the prices we were selling our commodities last year. This is excluding those long-term agreements.
With them, of course, this will be a little bit lower. This is like potential. What is also important to say that, as we are discussing results for the first quarter, you know, we in the valuation were using prices which were actual for that period of time. As this trend continues, this also leaves additional upside for the future valuation of the harvest for the second quarter and so on. If we move to financial results, as I said, in the very beginning of the year, of course, the biggest effect comes from revaluation of crops. When we did revaluation, we really had to look into those factors which affects our future harvest.
First of all, if we talk about forecasted yields, the condition of crops is good, so we didn't make any changes from the forecast and plans we had in the very beginning of the year. If we talk about the prices, so of course, this increase of prices has positive changes. As I mentioned a couple of minutes ago, we believe there is still room for improvement because current valuation in Q1 results really reflects the situation in the beginning of April. This increase of prices continued, and the contracts we made with higher prices than they were in beginning of April.
At the end of the day, we have EUR 3.5 million profit from gain of revaluation of biological assets, and this is substantial increase from the situation we had last year. If we talk about our sales activities and results from them, as I mentioned at the very beginning, generally, what we are doing right now, we are just fulfilling the contracts and selling remaining stock from the last year harvest, because absolute majority of the harvest from last year is fully contracted. We are just following agreements and selling by the orders from the customer. This is the reason why the sales decreased.
The last important note, we already mentioned this during our presentation of annual results. We made some changes in internal pricing. Generally, the aim was to really have very clear situation and have possibility evaluate how every segment is doing. As our Crop Growing segment really grows and sells forage to our Dairy segment, we wanted to make clear rules and have a better understanding how every segment is doing. The fixed price of those internal transactions was introduced.
Generally, this quarter, you can see that Crop Growing segment had EUR 0.7 million loss from such transactions, meaning that that forage, which was used in milk production or in Dairy segment, so generally, the costs were higher than it's set in our internal pricing. This can be explained that currently, we are using forage from last year. Last year, due to weather, costs of the forage, because yields were lower, costs were generally on similar levels, so they were higher comparing to our forecast to historical averages or how we would see this price to go. In the future, we would expect this result to be significantly lower or even in some cases positive.
As a result of poor harvest last year, we have this result in Crop Growing this year. If we had subsidies where we didn't have any changes comparing to the situation of last year. Overall, from Crop Growing activities in the first quarter, we have almost EUR 5 million gross profit, which is substantially higher than the result we accounted last year. As I said, the main driver is really still good quality of crops and most importantly, very significant increase in prices. Part of that prices is not only like our projection, but part of that is already contracted.
Dairy, I would say it's the easiest segment for me to cover today, because in small steps, but everything is progressing, I would say. If you look at the graphs on the screen, you can see that if we talk about milk yields, we have 4% growth year-on-year. You know, this is really good result for us, because you know, it's difficult to expect very significant growth there. Generally, I would say we would prefer to have small but constant steps in improvement. If we talk about selling prices, here we have similar situation to crop market because prices for raw milk are also increasing substantially.
If you can see from the graph, generally average milk price increased by over 16% in 2022. This leads, I would say to nice improvement in financial results, as the sales has increased due to bigger production, higher selling prices. It also led to better overall result, and we earned gross profit of almost EUR 600,000, comparing to EUR 200,000 last year. Another important milestone, we were always talking that we want to increase our herd, and had this 3,600 as a magic number we would like to achieve. Yeah, we're still missing nine cows, but somehow sure that, you know, this will be reached.
Generally we are operating in full capacities in terms of production in Dairy business. I would say that right now the main focus is really to continue the progress and also cost control is also important because of course all the segments feel effect from increasing energy costs, fuel. Though this is not that big subject in Dairy segment. Mushroom unfortunately the story is a little bit different when we talk about mushroom growing because this is the segment which really faced various challenges in the last couple of years.
If you remember last year we had quite big challenges in production due to COVID, due to some technological issues, when our production dropped significantly and as the costs in the business are almost, or in the segment, almost fixed, too, generally, this also dragged down the results of the segment. This year I would say we still have some remaining problems with production because if you can see from the graph, production in Q1 was higher than in the last quarter of 2021 but we are still lagging behind the production a year ago.
You know, though we still have this constant improvement, but we still can't reach this maximum capacity and to get the best result from our production volumes. Secondly, and even more importantly for the first quarter of 2022, mushroom growing segment was the segment which was affected the most by increase of costs. Because this is the segment which has quite low thin margins, I could say. Energy and payroll accounts for almost 35% of total costs. You know, these were, I would say, two of the cost lines which really had substantial increases. This unfortunately led to poor financial results.
As always, in FMCG market or in retail market, you know, when you have pressure on your costs, you're always trying to change your selling prices but, I think it's in all the market situation is very similar that, you know, it takes time, and it's not easy to do. Because we started reviewing our prices at the end of last year. First changes were done in Lithuanian market, then we were discussing Baltics, we are discussing Scandinavian markets. Generally, even for the first quarter, we have on average, if we compare the same products an increase in prices by around 5%.
If we look at overall figure and average sales figure, you will see from the next slide or from next table that on average we have almost the same selling price for Q1 compared to the last quarter just because of the different product mix. Still, average growth of selling prices by 5% is lower than what we experience in growth of costs. Of course, we will have to continue this process. The last negotiations we had will have effect on financial results in the second quarter of the year only. Moving to financial results, as I already mentioned, due to not full utilization of production and especially of growing costs, unfortunately for the first quarter, we have even a gross loss from the Mushroom segment.
Of course, now we are focusing a lot, what to do and what to change in the nearest perspective. I would say key focus areas are, first of all, you know, is production. You know, figures for first two months of the second quarter are promising. You know, every month, you know, we have more than 2,000 tonnes per two months. Getting back to the previous slide, you can see, you know, it would be better result than in the first quarter and in line with the production we had last year. Secondly, as already mentioned, you know, we are continuing negotiations regarding prices for the retail. As I said, the latest agreements we have, results from them will be seen in Q2 only.
The third major task for the segment is really energy consumption control, because you know, we are using gas, we are using electricity, you know, for heat, for cold, production of cold, et cetera. We are working on different solutions how to decrease consumption. You know, we have some wins in there, but still it's lots of things must be done if we want to. We have to improve result and reach and being on the level we were in the segment before.
FMCG, I would say after three, four years of constant growth, we are in the situation when growth of sales has stalled and, you know, it's generally on the same level what we had for the first quarter last year. The reason for that is mainly seasonality of sales. We already talked about this in our previous presentations, but for the last couple of years, we see a clear trend that customers from distant markets, U.S. for example, they really tend to order, you know, in huge quantities once or couple times per year.
Even when we did our plans for this year, we really didn't plan growth of sales in the first quarter and planned the growth in second and third quarters mainly. Now with the last negotiations, we believe that, you know, majority of that should come in the third quarter. For the first quarter, we have generally the same result from FMCG business as we had a year ago. Just as an overview, here you can see how and what are the biggest contributors of EBITDA and where biggest changes came from.
I think from the positive side that we really see nice developments in Crop Growing and Dairy, even FMCG with similar sales and the cost pressure, EBITDA is slightly higher. Of course, the biggest challenges are in the Mushroom segment. Overall, EBITDA had increased by almost EUR 1 million for the first quarter. Another important things to mention because we also did our annual presentation. We also said about our plans for this year that of course getting back to normal financial results and being more successful in our overall today's business is very important, and this is really a big focus for the company.
We also see 2022 as very important year for us in terms of our new technologies and development of new technologies and maybe as a commercialization of new technologies. As it was presented that, you know, we had the plan and we secured the funding to implement at least some of the projects, to have some prototypes, to have part of our activities operating and using those new technologies. Just wanted to give you an update what we are doing with those three key projects for AUGA Group. If we talk about our biomass and infrastructure, it was planned in the beginning of the year that we will operate three facilities by the end of the year.
Generally, we already started construction and installation works for the facilities. You know, the aim is to finish construction and installation works, as it was mentioned, by the end of the year. Of course, situation with suppliers, logistics, et cetera, you know, put some pressure on timeframe. But still the projects are implemented as planned. If we talk about second project, specialized feed technology, it was stated in the beginning of the year, you know, we have this first prototype and we are testing and working on the technology. This is really the situation for today as well.
You know, we are still doing tests, we are still working on some other developments, changes in the technology, and then we will have results of the tests, and when we can make a decision. We will have this next decision to make, how we want to scale that. Our tractor, you know, the aim was to start small production, and then we had the announcement recently that, you know, this preparation for production of the first batch, you know, small first batch, but it's already started. The first orders for some parts is already done and we are working on first steps in production.
Generally, you know, we are, I would say, quite optimistic about the outlook from a financial perspective, though once again, there are some risks involved with that. We're also moving forward with our technological developments. That's also, I would say, important and good news for AUGA Group. As always, information about our share performance. I think it also corresponds to the market. As always, there are links where you can find more information, financial figures in Excel format, et cetera. Legal disclaimers, and now I think I'm open for your questions and discussions.
Thank you very much for a comprehensive presentation, and indeed, we will proceed with the questions. Before that, I would like to remind all the attendees that you can send in your questions in the Q&A box of your screen. Let's start, and the first question would be as following: how the Q2 results could look for crop segment considering low yields? Thank you.
Thank you for the question. It's really difficult to go into speculations what could happen if you know we doing revaluation of crops every month and as I said the current situation with crops gives optimism and is really good. We are quite positive about the forecast. Of course you know we need to evaluate and look what could happen in the worst-case scenario. Of course you know if in the worst-case scenario we would have very similar situation to when we had last year when decrease in yields was substantial. I still believe we could be in difficult but in better situation just because of substantial changes in prices.
Because if we have, you know, approximately EUR 30 million of harvest value per year, you know, if you have 30%-40% increase in prices, this is your potential for additional or increase in sales. Of course, we have cost increase, et cetera, but, you know, we would be in different situation than we were in 2021. It's very difficult to answer the question because, for the start, we still believe in normal yields this year. I think we are better prepared, or maybe environment is better for us if worst-case scenario happens.
Thank you. Could you please comment on how soaring energy, transportation, and increasing salary costs will impact segment profitability, separately by segments? Thank you.
Thank you. We are not disclosing specific figures segment to segment, but I think we discussed briefly about impact of increasing costs when we discussed every segment. Just maybe to conclude, Mushroom segment is really affected most, and we also stated in presentation that energy and employees they account for almost 36% of the costs. Of course, increase is very painful for us and as you can see from the results, this was the main reason why segment is not profitable for the quarter. Effect on FMCG, we had some effect on FMCG, but I would say it's not that substantial. If we talk about agricultural business, Dairy or Crop Growing, of course, crop cost growth is there.
You know, we expected higher than historical growth of course in the beginning of the year, but now we can say that of course, actual figures exceeds our forecast. Still, we talk about much lower level of increase in costs if we compare with increase of prices of the commodities. You know, as long as we have prices, we can really still benefit from all the situation. In the FMCG and Mushroom segments, you know, it usually takes time when you can transfer this increase of costs to the prices of your products. We are working on that, but for the time being, of course, the impact is minimal.
Thank you for your answer. Another question would be, approximately 40% of debt is with floating interest rate. With increasing European Central Bank rates later this year, how much impact that could leave on profitability and liquidity in company's expectations? Thank you.
As it rightly stated, the part of our financing is with floating interest rates. Of course, this will have a negative effect on our funding costs. It's just, you know, the question what are our expectations, how high the interest could go. Because I would say from our financial liabilities, it's even more than 40%, but around EUR 40 million are the loans with floating interest. Generally, you know, everyone can make a calculation based on the assumptions on growth of interest rates, how this could affect our financial costs. Overall, you know, it's still not that significant factor to discuss liquidity of the company.
Of course, this will be yet another increasing cost, and this, of course, will have negative effect on our profitability. This is not the object to put the question overall liquidity of the company at risk.
Thank you for your answer. Isn't it somewhat a red flag that leading agricultural tractor manufacturers are not really interested in AUGA M1 technology? Thank you.
Very interesting question. It would be very interesting to have a longer discussion with the person who asked this because it seems that he knows more than I do, or maybe he's very well-informed what is happening in the company. Because, you know, as a listed company, we have some limitations what we can and what we can't disclose. You know, we have different discussions with different parties. You know, if we will have something to announce, of course, this will be done as required. I think general comment regarding this technology and commercialization of technology is that, first of all, and we stated this from very beginning, we are not aiming to become yet another tractor producer and sell tractors.
We are working to create completely new way how agriculture is done, and we are working on a way to create solutions how it is done. Tractor is only one part of this puzzle. Hopefully this answers your question.
Thank you for your answer. Could you please comment on software possibilities that AUGA M1 will have? For instance, precision agriculture technology.
You know, there are lots of technological solutions which could be used, which are already created, so you don't need to develop something new. You just need to find a way to use them in your technologies. Of course, we are looking into lots of them. Priority for today is really to work on those three key technologies we are currently developing, on those three areas we are currently developing. That's where our main resources are. Absolute majority of resources are used for the time being. Because these are the most important for us for our future plans. These are the most important for us for all the things we have planned.
I think, you know, those software solutions mentioned in the question, of course, they are important, and they will be in a much more detailed discussion in our R&D department. Generally now, resources are focused in those key areas which are, I would say, more important for us to develop right now. You know, this is more for the future, and now we are focusing on core things.
Thank you. How much of forecasted harvest has already been booked, and what is the difference in pricing with last year?
We are not disclosing specific figures. To calculate which specific proportion of harvest is booked, you know, this is not like subject to judgment by someone. We have methodology we are using, which is approved, which is reviewed in our audit committee, which is reviewed by our auditors. Generally, it's more like a mathematical formula in place than you put, you know, your yields, prices, costs, and yet you have to calculate when the specific culture was sown, when the specific culture will be harvested and, you know, what is timeframe from one point to another. This is like the proportion we are booking in our financial results.
Of course, for the first quarter is really the minor part because summer crops are not calculated yet because they will be sowed only end of March, beginning of April. This result we are showing for first quarter this relates to winter crops only.
Thank you for your answer. When you say you are optimistic in terms of financial perspective, considering the new green projects, what does it mean for cash flow and future new earnings this year and in 2023? Thank you.
I think, okay, maybe I used this term optimistic too often in the presentation, but this is a side effect from really difficult years or results last year. But I think what I wanted to say that we believe and we hope that conditions we are currently and price level we are currently and we are making first contracts on this level. They give us belief that financial results for this year, for this season of harvest, should be substantially better than we had last year. I just can't find the question to remember the second part of the question. Okay, sorry.
Regarding green projects, if you're having in mind those technological projects we are developing. I think optimism comes that, you know, we were working on those ideas and those technologies for two, three years already. We have this trust that we can find the solution and to become producer of agricultural goods with neutral CO2 emissions. If we are successful with the project, we have projects we are currently implementing, so generally this will be really proof of our concept. Really the proof of projects we were doing for the last, let's say, two, three years, that they really work. The technologies we were creating, they really work.
Then we will be in position when we can, you know, start new discussions, how we can expand this technology within AUGA Group, how we can expand the usage of this technology for the third parties. When we will be in situation when we can show working concepts, but not only ideas that, you know, we have in our heads, and we believe that this works. We will have actually working prototypes. Of course, if we go into details about all those projects, it's not only about some, like, changes, CO2 emission decrease, et cetera.
There is also financial incentive behind all of them because, for example, if you talk about the tractor, so, you know, changing fossil fuel with their current price level to biogas, it makes financial sense to do that. If we talk about grass processing plant, we already mentioned that, you know, we are working on technology, and we aim not only to reduce CO2 emissions but also increase our milk yields. You know, then if we will have all those prototypes working and showing financial results, so of course, it will be much easier to discuss various possibilities to introduce this technology, as I said, either in AUGA Group fully or in for the third parties as well.
Thank you very much for your answer. Could you please comment if currently the wheat price increase is well exceeding the cost increase? The same question would be in terms of the Dairy segment. Thank you.
If the short answer, yes. Generally, if to look at just percentage-wise increase of costs and increase in prices, the increase in prices is higher than the costs, preliminary costs we're having right now. Because in agriculture we have this challenge that, you know, you will have your final costs of all agricultural process in the autumn only. From what we see today, the increase in prices is substantially higher.
Thank you for your answer. How much negotiation power does AUGA has to negotiate mushroom sales price? Thank you.
Very good question. Unfortunately, I don't have very good answer to that. You know, I would like to believe that we have some power at least, but looking into financial results and increase of prices, I have to admit that it seems either we are not doing a good job or we don't have this power. Though we are on serious note, though we are really big producer in our region, but you know, we have competitors, so of course it's difficult and challenging.
Thank you. Let's proceed to the next question then. Can we expect better organic mushroom proportions further on? Why the sales price move barely considering better organic sales proportions? Thank you.
Increase of organic mushroom sales is one of our priorities for the last couple of years because really, you know, we were saying this for ourselves, we were saying this for investors that we see big potential there and, you know, prices are much higher. Generally, we could be in much better position if we would be able to increase proportion of organic mushrooms in our sales. We were working to do this for the last two, three years, but, you know, for various reasons we are not that successful in the level we would like to be. You know, we have some projects where we see some positive signs. There is some increase in mushroom sales this year, but not on the level we would like to have.
It's still much work to be done, but we still believe that this is really big and huge opportunity for us in the longer term to improve results of Mushroom segment, and we are still working on that. Regarding prices, as I mentioned during the presentation, yes, we slightly increased the proportion of organic mushrooms, but you know, this is mathematical thing just to calculate average price. There are different type of products, you know, packed, unpacked, organic, conventional. Generally, though we had small increase in prices due to different mix, at the end of the quarter we have average price on the same level we had last year.
Just different product mix is the main reason.
Thank you. Another question would be: Have you recorded any demand so far for the new technologies? Or when do you think you could be sharing the R&D products?
As already mentioned, you know, we are not disclosing any news regarding R&D developments, and we will do so when we will have something to announce. Our main focus for today is really have working technologies in place. Because I think this would be really a big change in the current situation, because we had several discussions already about those technologies. There is one situation when you talk about ideas, and it would be completely different situation when you could, you know, go to one farm and show operating biogas production facility, tractor, feed processing plant, etc., in place. You also have tests showing actual results in terms of production, in terms of financial results coming from usage of those technologies.
I would say for today, our main focus is really to complete the projects we are currently working, and then will be the next step, how to share that and how to benefit from that.
Thank you. In case of recession, do you think there would be a significantly lower demand for your products being more expensive? Given the Ukraine situation, any market turmoil would be even more positive for you in terms of prices overall?
It's very difficult to comment on future prices for commodities. I would say that situation in Ukraine was not the only factor for increase of prices, because this increase has really started at the end of last year already. There were other factors which led to increase of prices. You know, situation in Ukraine, of course, had a huge effect on that, but it was not the only reason. You know, we believe that the current price level is good for us. That's why we're also making contracts already. You know, it will be very difficult to speculate how the situation could change.
As I said, you know, we have current level, the level of contracts we could make for today. We are happy with this level, and that's why we are doing it right now. Regarding recession and the effect on our products, we see, of course, I do agree that organic products are more expensive though, so theoretically in case of recession, of course, this part of business could be hit. From other perspective, consumption of organic goods grows in double digits for the last, I don't know, 10-20 years every year in all the major markets. There is a huge market, and we are quite small supplier in this market.
This trend of growth, it really continues. I would expect that even in terms of recession, you know, we would be maybe talking about slower growth of this trend. The effect on prices due to that will be lower. It's really, you know, our just thoughts. You know, we will see.
Thank you very much for your comprehensive answer. We have a few more questions. The next one would be as follows. The attendee is saying, "As I understood from the previously said, that eventual target for M1 technology is to sell it to other manufacturers as AUGA is not becoming a tractor manufacturer. Could you please comment on that?
Sorry for misleading, but no. Yes, from that perspective, that AUGA is not planning to become a tractor manufacturer. As I said, what we want to be, we want to be the company which creates technologies and then shares those technologies. We see our tractor as one piece of the overall solution, how agriculture could be done in the future. We are not planning to produce tractors ourselves. We already showed in the announcement that we are signing agreements, and we will buy assembly services for the tractor. This will be one of the products of our overall solution in sustainable farming. Hopefully this clears my previous answer.
Thank you very much. What are your Q2 crop revenue expectations considering and assuming low level of inventory?
I think the most important thing is that sales of crops they really have very minor effect on our financial results because as I said in the very beginning of the presentation, if we talk about sales of crops, so result from those crops we are selling, it was already booked last year when we harvested them. Now it's only actual selling process. Generally we sell them at the same price they are in our books. In theory, result from our sales activities should be zero. Of course, it changes from time to time, but in theory it should be zero. You know, this when we talk about our changes in our sales, so it's not affecting our profitability, profit EBITDA in Q2.
Of course, as our harvest last year was substantially lower, we will have the same situation we had in the first quarter. Because even if we look at historical figures, a majority of the harvest is always sold in the same financial year. You know, only smaller part is left for the first quarter next year, and the remaining of the harvest are sold in the second quarter next year. To this year we will have exactly the same situation. We have lower sales compared to last year in Q1, and we will sell the remaining of last year harvest in Q2. Definitely, I'm not ready, sorry, to give specific figures, but obviously sales will be lower and crop sales will be lower than last year.
Once again, this will not affect our financial results in Q2 because this was already booked in last year's results.
Thank you for your answer. As all the questions are answered, on behalf of AUGA Group and Nasdaq Vilnius, thank you everyone for joining. It was our pleasure being with you today. The recording of the presentation will be available in the Nasdaq Baltic YouTube channel. Thank you very much, Mr. Ambrasas for the presentation. Have a good day, everyone, and goodbye.
Thank you. Thank you for your questions, and hopefully we'll have a chance to meet you after three months.