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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, and welcome to the BayWa Analyst Conference Call Q1 2022. Today's conference is being recorded. And at this time, I would like to turn the call over to Josko. Please go ahead.
Good morning, everybody, and welcome to BayWa's Conference Call on the Results of the First Quarter 2022. As usual, Professor Lutz and Andreas Helber will guide you through the presentation and this extraordinary quarter that we have achieved in this year. All related documents have been sent out this morning. Otherwise, you can download it from the BayWa Investor Relations website.
I hand over now to Professor Lutz. Thank you.
Good morning, everybody. Thanks for joining us to our analyst conference this morning. And indeed, Josko said it already, and we have an outstanding first quarter '22. It's the best in the 100 years history of BayWa. Nevertheless, I would like to give a little comment on that before we go to the details.
It's clear that it's not only windfall profit, and especially it's not the war-related profit. Maybe in some little parts of our business and the different businesses, and BayWa is a very complex company. And I say that the beginning of the conference because we have the discussion in Germany regarding a war profit tax, especially the green part in some left wing, members of the Social Democratic Party are in favor of such a tax for [ more ] profits. Nevertheless, the liberal party is, of course, against it. We will see what will be the outcome at the end of these discussions and at which meeting the German government is in at this point in time. So this is very important to understand. We have some delays. We have some postponing effects and impacts also from the last year.
Now in the P&L statement and the balance sheet in the first quarter of '22. Nevertheless, bottom line over the last years. We were delivering to you one record high after the other. And now we'll start with a really exceptional first quarter in '22 as a type of the way. Of course, I'm talking about '22 and not '21, okay? So this is on Page 4, the first sentence. This is normal that I see it immediately. My colleagues sitting around the table here, they know that. So it's '22. We are not -- we are -- as BayWa, we are never behind the time. We are always ahead of schedule, of course.
So should I say the revenue is up 54%. This has to do with a booming situation in the solar and energy trading in our RE, AG and also the energy, and the heating oil and diesel and fuels and so forth is in really outstanding shape. I personally expected that we have a significant downturn here, which is not the case because people are buying heating oil especially to increase the stock due to the uncertainty of what's going to happen in the future with the oil prices and the energy prices.
Great performance from Cefetra in Rotterdam, our global Agri company. We have some real boosts from specialties, which is part of our strategy implemented a few years ago. And we have regarding the commodities price really, you know all that, we had a very high long position due to the expectations. Our management and the security risk officer had and so far that's more or less self-explaining. Global Produce had a better start than the last season in New Zealand, especially. Also, we have now a very rainy weather situation over there and some problems with the harvest. Nevertheless, the start is excellent.
And our Agri Equipment, the machinery business, is sustaining on an extreme high level because farmers are investing at 1 billion -- so-called 1 billion farmers subsidy in Germany is important for our business and especially the order intake, which is on a very high level.
And again, outstanding Building Materials because we have this construction and building process and boom here in Middle Central of Europe and especially in Germany and Austria, of course. And the winter was very smooth and soft this year. And so far, it's a very, very good start. And as you know, the BayWa share reaches a record high a few days ago. And some may, maybe comment that, okay, it's maybe a high, but nevertheless, in my tenure during the last 14, soon 15 years in BayWa as CEO, it's not really such a significant increase in comparison to 2008 or 2007.
But if you look in the details of the share price development, you see that especially the new strategy, the internationalization process, which was and is a great success for BayWa, is the core of the new -- let me say, the new calculation for a share price. And the old classic BayWa AG is much more unimportant, so to say, smaller in comparison to the new businesses. And then so far, without all these investments in renewable energy in Global Produce, our international commodity trading, specialty business and all these things which we have done without all these investments, the share price would be really under pressure because BayWa would have been then a restructuring case.
Turning to page, what is it, 5. The development of the group, you see the comparison over the last year. So if we had to provide to you today a loss of EUR 50 million, EUR 40 million, EUR 30 million, this would be normal. Now we have a plus up to EUR 155 million, EUR [ 145 ] million in the Q1 EBIT. And it's a real EBIT, it's not adjusted EBIT or something. EBIT's a real EBIT, also including all the costs we had in the first quarter. And if we were in a loss situation, this would have 2 consequences. First of all, I wouldn't be here today. This would be then the chance of Andreas Helber to explain all the figures. And the other thing is we would be and we would say relaxed. It's just important for you for the future.
And after the change in the top management in BayWa next year, that it is not for granted that in the next years and also the upcoming economic problems on a global basis, that we provide to you guys always EUR 100-plus million in the first quarter. And we explain it later.
So we turn to Page, what is it, 6, 7. We come to 7. There's not a big change to my comments during our big conference end of March. The market developments in renewable energy is really we are on track. The global business is on track. As always communicated, the solar business is going to become much more important in the future. And the onshore wind energy, you see a little downturn of minus 3% expectation of the market. Nevertheless, it's still great. The upside is significant, and BayWa has run about 20-plus gigawatts in the pipeline for the development of wind and solar facilities.
On the right side, you see the development of the heating oil, especially -- so this is extremely important, of course, for the customers and the users and so forth. And well, I need not to comment on that. I think all of you are involved in the energy cost development all over Europe due to the war situation in Ukraine.
Turning to Page 8. You see EUR 1.5 billion revenue, EUR 63.9 million EBIT. This has to do with the growth in the trading business, trading of photovoltaic modules, of course, and also our energy trading business. We sold 2 big projects in the United States, in Texas. And the outlook for '22, very important, we expect 1.2 gigawatts for sale in '22 including IPP, of course. So that's what we are going to build in '22. And most of these plants will be sold. Some of the plants go in the IPP pipeline due to the changes of our strategy after having EIP on board as our co-investor. We expect that the high level of sale for our solar module and components business will be sustainable. And well, I would say, bottom line, we expect another record high for RE.
Next, Page 9, you see the sales and the EBIT of the energy sector. The revenue is up 72%, EUR 650 million; EBIT, EUR 8.4 million, has to do with the price and volume increase, as I said. And the only negative, a little element is the decline of sales in the lubricants, minus 2%. But nevertheless, what we expect for the rest of '22, the expansion of our LNG -- green LNG fuel station network, we are investing significant money here. The pellet sales will be increased as well. You know we are going to become more and more important. The pellet distributor, Austria is one of the key companies in Europe already.
And question is only what's going to happen with pellets regarding the question is this really renewable energy, is it ESG compliant, which we believe, yes, of course, people are investing in new systems, in heating systems. But now there's again an unpleasant and stupid political discussion among some offices here especially in Germany and the government and so forth. That is obviously the same, blah, blah, blah.
Well, so nevertheless, due to the war situation, it's a little bit tough for us to predict the price trend for the future and what's going to happen for the bottom line. Nevertheless, I expect still higher energy cost and especially cost for oil. Now if the European embargo is really upcoming, big discussion with Hungary, with Czech Republic, with Slovakia and some other European Union countries. So that's unclear that was the message we heard this morning coming from the radio stations, so we'll see. But it's not as easy to predict as in the past.
Turning to Page 11. You'll see the market developments in the Agri business. First of all, on the left side, the commodities, we saw a price really more or less and especially wheat, maize, corn is affected, rapeseed and soy meal as well. We had a significant [ loan ] position was very reasonably managed by our staff in Rotterdam and here in Munich. And then bottom line, we are benefiting, of course, from these market developments.
And we'll turn please to Page 12, the market development in the Agri resources, the agriculture products. And here you see the grain balance. And that's interesting, especially for the forecast what's going to happen with the prices and the commodities, especially. And here you see the global balance sheet for grain, and we do not have a high storage at all. We are in a minus position -- we were in a minus position last year. This year, '21, '22, we expect the same, also for '23. And here, of course, especially due to the gap, which we will see regarding Ukraine and Russia, which will cause significant problems in the Northern part of Africa, in Black Africa and also in the Arabic countries.
Turning to Page, what is it, 13. Our input resources, and that's indeed very important to understand. We bought a pretty high volume of fertilizers last autumn. Looking forward, what's going to happen in the markets, and the forecast from our management was not only reasonable, it was completely correct. And this is the reason why we had an upside in the fertilizer business because the prices in Q1 were increased 40% overall relevant fertilizers. The Agri equipment is still on a high volume. 8,000 new tractors were registered here in Germany, which is down of some points, I don't know how many, 5% or so. But nevertheless, the level is extremely high, and this has to do with the uncertainty regarding the currency, the war situation and the sentiment of the farmers.
And there are always then high commodity prices, good performance last year from the farmer's side. So they are liquid, they have a high liquidity status, and so far, they are investing in Agri machinery. The Global Produce we expected still, yes, so to say, 15% upside year-to-year -- on a year-to-year basis in New Zealand, especially the apple production, which is for the international business is extremely important for BayWa. Nevertheless, due to the rain situation, as I mentioned already, that's getting a little bit more complicated. But the management takes some actions, and I think we will manage it.
And what do we expect now in the Agri business, we start with the Cefetra Group, EUR 1.4 billion, it's a plus of 35%; EBIT, EUR 17.1 million, which is really great, has to do with the commodity price development. But also the specialty business is performing outstanding and very positive on that. The outlook is that we expect that Cefetra dairy and the Sedaco trade based in Dubai, and dealing especially in Africa with special cultures and grains and so forth, we expect here an increase in '22. So it's again a very good year in comparison to last year.
Of course, there's always one uncertainty. I have to mention that the logistics situation due to the shortage in containers and the price development, the question who is going to pay for all that, question of inflation and stuff like that. So bottom line, the consumer will have to pay it. And so far, the overall economical situation is going to be much tougher as it was last year.
Turning to Page 15. Revenue up EUR 1.4 billion in the Agri Trade and the Service segment. So especially Austria is performing extremely well. The EBIT is with EUR 58.7 million, extremely high for the first quarter. We -- normally, we see here a loss situation. But this has to do with the price development, our positive sales for fertilizers, plus 7.1% on a year-to-year basis. And of course, we are, as I said, benefiting from the commodity situation, and we have a very strong development in RWA, our subsidiary in Vienna, due to Austria and especially also the Eastern European branches of RWA. We expect decline in demand for the fertilizers. It's going to be challenging maybe in the second half today. It's hard to predict something, so which is not serious. But we expect a positive -- good development in the Agri business.
Coming to the equipment, the machinery, you see up of 28%, EUR 476 million. And the EBIT is EUR 11.3 million. Why? I explained it already, the farmers are in a good liquidity shape, and they are investing usually in machinery and devices to protect the values. The greater the wealth they have created.
The outlook for '22, as I said, we expect here very stable business. And of course, it depends always on the chip situation, can the manufacturer produce all the machines the market is demanding for or do we have to -- or will we be faced with some delays. At this point in time, we are not sure that we can say that it's okay.
So turning to Page 17, Global Produce. You see a little upside 4%, EUR 224 million revenues; EBIT, EUR 7.3 million, has to do with the positive development in New Zealand, especially. So we will see what's going to happen. Important now is we changed a little bit our strategy regarding our premium trademarks. And here, especially Envy, we sold licenses to China. And these are the first earnings now from our licensing business department and around about EUR 7 million are here included. With other words, the profit in global produce in the first quarter, more or less the black and white consideration of close to EUR 7 million. And the outlook for '22 is also we have now this mixed weather situation is positive for '22.
Last business segment is Building Material. Here, you'll see we have still a sustainable construction process and construction trends here in Germany, especially. All is up and also the prices are up. Up to this point in time, we don't have a problem to -- on our [ arm's length ] process to make the customers pay for that. And so far, the development is very positive.
You see that in Page 20. Normally, we see here very high loss, but we had a soft winter weather in Germany this year, and it's a minus EUR 1.2 million and an increase of revenue up to EUR 477 million. This is really outstanding, and we expect a very positive development again in the Building Material business. And maybe could happen that we have a slowdown a little bit in the growth in the second half. Nevertheless, we are positive for very good results in '22 for Building Material. Also due to the changes in the strategy, more specialties and our building and project development company is becoming more and more successful more and more important for the bottom line.
So that's the overview from an operational point, and I hand over now to our Chief Financial Officer, CFO.
Yes. Thank you, Klaus. Good morning, ladies and gentlemen also from my side. This time, I will keep it really short because -- we -- I want to give you more time for Q&A with the CEO because Klaus has to leave latest at 9:15. He's going to meet our Prime Minister, so this is quite important. So if we have some questions left, we put them in first. We can continue then afterwards. But just the following pages that you have in the presentation are about the summary of the business units, the summary of the income statement and the balance sheet. I think we can really go over this.
Just one initial comment also I read this morning, the comment which I expect to read that management did not increase guidance or something for the full year. You know the process how it is done, and Klaus made a comment on that. Even we have a wonderful out boosting Q1 this time. It's well and what we always said for the first quarter, and Klaus made this comment also. It has a limited meaning for the outcome of the full year. But that should not be taken that we did not adjust -- should not be taken as a negative signal for the quarters to come. We will first overlook the forecast after the half year period, and then we will probably give more comments on what we expect. So this is as an initial remark.
And just going over the slide's number, what is it here, it's really small, 22, the other activities. You know that, that has been impacted. It's a bit lower than last year, impacted by higher insurance costs, pointing out the D&O premium that we have to pay. D&O insurance is all over the place, went up dramatically. So this is included here. And then we made higher -- how do you say, donations to the BayWa fund in the help of the Ukraine war. And some other issues that made it up to the EUR 17.8 million. But this is in line with 1/4 of the whole other activities expense that we expect for '22.
The other -- the business unit, I will go over that. You know the numbers, you will see the number. This is just the summary of all the divisions or the segments Klaus dived in, in detail.
And just on 20 -- I really can't read it, 26, this is the summary of the income statement. Be aware of this. This must be shown. Be aware of this wonderful earnings per share after 3 months with EUR 1.09. I've never seen that. You know that it's always been negative firstly, being positive last year. So this is a very good and solid basis for the next 3 quarters to come.
I think that should be it. We have some 20 minutes left for questions, also having Klaus with us. So I will hand over and give it back to Josko.
Yes. Thank you. So we would like to start the Q&A session now and take your questions.
[Operator Instructions] We will now take our first question from Knud Hinkel from Pareto Securities.
Yes. Congratulations to the sensational quarter on German niche left [indiscernible]. Very good. Yes, a couple of questions. First one, on Agri Trade & Service, you said that was a little bit of an exceptional situation because of the fertilizer business. Maybe you can give us a feeling how the full year number could look like, so -- or to be more specific, when do you expect normalization to kick in? Is it after the first half of the year? Or is it -- or was it later or is it earlier? So that would be my first question.
And second question is on Building Materials. So you have shown that the prices were significantly up for number of materials. Is there a point when these prices become a little bit destructive for the Building Materials business or demand, is this distracting demand? Is that something that you have on your mind? And especially with regard to higher interest rates, should we expect the weaker second half of the year, a weaker remainder of the year? Is that something that you expect?
And last question, and I did it -- did post that question for some time now. It's on wage cost inflation. We've seen that one union asked for 8% higher wages. That is not the outcome, but that is at least what they demand. I think you said last -- on the last call that you were safe for '22 in Germany, but you have also some foreign subsidiaries. And so I would just want to understand better what is your outlook here and what is your -- maybe you can give an update on that.
Thank you for the questions. I start with the last one, the unions. We don't have any demand on the table, so to say, for an inflation increase or something like that at this point in time. We expect next year, in '23, maybe also tougher discussion with the union. But the union is just important or more or less only important for the BayWa AG, not for international business and for our subsidiaries all over the world. And here in Germany, the head of the negotiation team of the Verdi union, the service union said already to me that they start with the discussion internally next year in January, February. And then they will come, I would say, April, May to us with some demands and questions and so forth. And so far, at this point in time, I do not have any questions and demands from the unions, not only in Germany, also in Austria and internationally on the table. Is this answering your union question?
Yes, it does.
Thank you. Then we come to the building. Of course, there's always a point in life where price increases are very negative then for the business projection and the predictability of the business and bottom line also for the real figures at this point, we don't have a really significant slowdown in the Building Materials business. We expect a little bit in the second half a little bit. I can't put figures on the table. This wouldn't be serious. Up to now, the booming is still intact. There is no change, but we expect being careful without consideration for the near future. In the second half, we see maybe a little downturn but in the order intake, not in the current business.
Then the question is, of course, what's going to happen with the interest rates of ECB. I don't expect really a significant increase. I can't imagine because who is going to pay the due in Southern Europe, especially. So the room to do something, the space for Mrs. Lagarde and all the other highly qualified people in the Board of the ECB is very limited. So I don't see a similar development as it was now. First step in the United States last night with 0.5%, I think, yes?
Yes.
And expectation was 0.75%. And now the stock exchange is celebrating already. It's interesting. I believe in Europe, the room is really very, very limited for the ECB or we have then an artificial economic crisis all over Europe and, of course, especially in the European Union.
To the; fertilizer business, of course, we had some upfront buying effects because the farmers, in the beginning, they didn't want to buy in the beginning of the first part of the season. They didn't want to buy then there was an increase, and they bought more desperately. And we are benefiting from that, of course. And now the question is what's going to happen in the next part. I do not see a decrease of fertilizer prices over the next months. because gas oil -- so the energy costs are very high. And especially the gas prices, if there is an embargo for the European Union regarding the gas imports from Russia, then we will see significant higher gas prices as we have it here. So this makes the price situation for the fertilizer [ worse ].
And also the question is what's happening over the next weeks, and there's so much uncertainty around what's happening with the fertilizer production because most of it is in Russian hands. And at this point in time, it's not affected by the embargo, and we are still in a more or less normal business relationship with some of these companies. I do not want to mention names now. And so that's increased prices. The market demands had a little downturn. Now it was up in the first quarter. Maybe we will have some delays. But the normal fertilizer business as we had it over the last years, is not to be expected in this fiscal year.
Mr. Hinkel, if I may, I know you want to have [indiscernible] a flavor of where the Agri business could stand at the end of the year. And this is exactly what Klaus mentioned. These are the 2 big question marks. The Building Materials division, not so big; but Agri, in the second half of the year. We have last year for the full year at EUR 12.3 million. We are already now standing at EUR 58 million. So that was surprising us as well. But that could not be taken by -- so be very serious on that. We stated we did not give a clear guidance, but as it is written in the comments is that we expected an uplift of some 20%, giving this EUR 12 million full year result. I think this should be and must be revised after the 6 months period, having the second half of the year with the new harvest coming in, new prices coming in, new fertilizer situation coming in, that must be revised then. And I beg your pardon, but we have to wait until August until we can give you a clearer view on that, also what that means for the full year number.
Okay. We will now take our next question from Sven Sauer from Kepler Cheuvreux.
Just 2 remaining questions. One was already answered. Were there any significant one-offs in the first quarter?
No.
No? Okay. And the second question, I'm sorry if you mentioned it, I had some trouble connecting at the beginning. But in the renewables business, did you sell more projects in the first quarter than expected? And were those maybe the previous quarter?
No, no, it's -- we just sold 2 in the United States, and this was in line with the budget. And the really good positive results in the first quarter comes especially from the energy trading and solar module and devices distribution business all over the world. Very high demand from residential customers, especially.
We will now take our next question from Oliver Schwarz from Warburg Research.
First one would be in regard to.
Do you hear this? This is knock, knock on Schwarz's door.
Okay. I'll try to be more lenient with my questions, sir. First question is BayWa r.e. Did you already experienced some, let's say, restraint in regards to availability of PV panels as a result of the lockdowns in China and the clock-up of the respective harbors there?
Yes, that's the case because Shanghai is shut down. And of course, we ordered the volumes. China is the most important manufacturer for solar modules and some devices. And we have here some delays. But positive is that our storage, especially in Tubingen, is high. And at this point in time, we don't have a shortage. But we, of course, will not survive, so to say, the situation if Shanghai and the harbor and the shipment so that supply chain is still broken over the next, let me say, 6 months or so. But this we do not really expect.
Okay. As you already locked in 1/3 of, let's say, the overall project volume for financial year 2022, which is 1.2 gigawatt -- so from your point of view, there is no real, let's say, risk in regards to you being able to finish all those projects as a result of, let's say, patchy availability of the respective parts?
Yes, that's a great answer, right? I agree.
Okay. Cool. Second one is about the hybrid bond. Any ideas yet how to manage that in the not so distant future?
It's a good question.
We are already in the process. We had the kickoff last week. We mandated 3 major banks to get us through the process. More to come. It's going to be a bit more expensive than it was in the past. We are in the scenario of the Ukraine war situation. But I guess what we are just going to do is to link it again with an ESG criteria. So this is the plan. And yes, the market partners are positive that we -- that we will replace the hybrid in autumn.
Okay. Very clear. And lastly, for the time being at least, looking at the profitability of BayWa r.e. Obviously, those 2 projects sold in the U.S. in Q1 seems to be of, let's say, high margin, maybe even above the average of what is to be expected from the portfolio of BayWa r.e. on average. So when looking into the oncoming quarters, given the higher prices of components, probably some problems with availability of trained workers to accomplish all those [ fees ], do you expect the profitability on projects when looking at project by project? Especially in the light of rising interest rates, do you see that's going down slightly significantly? Or is that basically a copy-paste of what we have seen in the first quarter?
Firstly, Mr. Schwarz, let me take this question. On the first quarter performance, we must be very clear on this, the major part of the profit came not out of the 2 projects that we sold. So to give you a flavor, out of the EUR 60 million, what is it EUR 63 million that we made overall in the RE business, EUR 33 million comes out of solar trade, so the trading business, solar modules and converters, EUR 22 million came out of energy trading. That was an overlap, you might say, also from last year. We knew that these profits would be coming in the first quarter '22. Roughly, I would say, from these 2 projects, I don't have a very clear mind, but I think something between EUR 15 million to EUR 20 million is the contribution out of the sale of these 2 projects. And then we have the cost overlap, the overhead, that brings it down to EUR 64 million.
So that is from the split, so don't take the EUR 64 million and divide it by 2 and say, oh, wonderful project. So the profit contribution was this way that I just explained.
And for the second part of your question, what does it mean, yes, of course, the availability of converters, of solar modules higher prices could impact future projects. But I think this does not mean it's not that relevant for the project to being sold in '22. These are almost done or the materials almost in for these projects. It's better the question for the years to come, what does it mean for them? But I just talked to the management, they are convinced that they could achieve it because the good thing we have, on the one hand, we have the higher prices on the modules and the input resources; but also, we have the higher price on the energy producing. The IPP project or the project for investors would be getting more attractive on the higher price levels. And that was offsetting, of course, a little bit the higher prices and may be rising interest.
But also on the rising interest rates that we discussed prior, as Klaus said, we do not expect the big impact or the big bang on interest rates. If it goes up by 0.5% or maybe even 100 basis points, that would be it. I mean that would be included in the calculation then, but it would not do a damage or whatever to the whole business model.
We will now take our next question from Anne Margaret Crow from Edison Group.
Congratulations on a superb start to 2022.
Thank you.
I have 2 questions. The first relates to the Agri Trade & Service business unit. I would like a little bit more detail on the decline in feed sales and whether you felt this was simply related to mild weather or whether you felt farmers were resistant to price increases and were looking for alternative ways of managing production. That was the first question. And the second question related to the Building Materials business unit. And I hoped you could quantify the contribution from the project activities.
Thank you very much. Coming to the seed business, just look to the seed, there's just one from the overall business, by the way. It's -- so you mean it's 1.5% change to the previous year, yes? Is that the case here? 1.5%?
Sorry, the feedstock business.
So you mean the feed, yes. I'm old that I do not hear anymore. So -- and of course, I understood you as always perfectly. To the feedstock, well, this is a very critical situation not only for us but for Central Europe due to GAP of the European Union. We have a decline of 2.41% from the volume side. And what is the reason? The reason is quite simple because the volume of meat to be produced in Europe and especially here in Germany due to gap and due to the overall mood in our society and the expectation regarding the animal situation and to protect animals and to create a good mood for animals and all these things had a very simple consequence, that the farmers are reducing the animal stock, cattle especially and the pigs. The reduction is really significant. I personally expect over the next years, maybe we don't know really what's happening due to the bad situation, but let me say going concern, we expect a reduction of the meat production of the livestock here in Central Europe.
And we see 2 moves. The one move is to Spain, and the other move is to Eastern Europe. Of course, Eastern Europe, I mean, Bulgaria, Romania, Czech Republic, Slovakia and so forth. And we are becoming more and more depending on inputs from our European brands. And this has, of course, for the Agri business and Service business a direct impact because this is especially Germany and Austria.
We have a different situation in the Cefetra Group based in Rotterdam because we are really benefiting from this move to Spain and U.K. Our Glasgow operations, Cefetra Limited, is exporting from U.K. to Spain feedstock. And so far, it's a change in our P&L statement from right to left, from left to right. But the fundamental movement in Europe, Central Europe is livestock will be reduced.
So take our Chairman of the Supervisory Board, for instance. He is in the livestock business. He was over a decade in the livestock business, his tables are empty now because it doesn't make sense anymore. Of course, the prices were increasing. Nevertheless, you have so many negative impacts and even attacks from the society. They are consuming a little bit less meat as it was over the last years, but it's just a little bit. But if you talk to the people, it's a lot of misunderstanding and blah, blah about animal well-being and all these things. And that's the reason why we have here a decline, but it's not so dramatic as it sounds now on the basis of my explanation, but this will come. So that's the one thing.
And the other thing is Building Material. Marcus Pollinger is around, my successor, still listening and learning, of course, from the analysts for the future life. What is the portion of our project GmbH, last year, we had -- what was it last year, was EUR 5 million. Now even already in the first quarter, around about 2-point something, a little bit more than EUR 2 million. And the trend is increasing. And over the next years, we said we want to have a split of Building Materials and Specialty Business and the project development, let me say, 60-40 or so, yes. So that's an interesting and more stable business, the more stable business development.
Andreas forces me now to leave because Prime Minister is waiting. Tell him he should wait. He is our employee, isn't he?
Is this answering your question?
It does. I hope your appointment with the Prime Minister goes well.
Yes, I make a speech about the subsidies for the bridging support for companies here in Germany. And I'm President of the Chamber of Commerce. Well, I'm honored to say something, but it will be very critical and that people don't know what Klaus is saying, and it's always a little risk for them.
Now I have to leave. Ladies and gentlemen, thank you for being with us. Andreas is around. Josko is around and also Marcus if there are some more specific questions. Looking forward to see you or hear you for when do we meet together, in August.
Probably to the Capital Market Day.
Or maybe the Capital Market Day. Then also Marcus will be around and give his vision for the future of BayWa, and I'm always more than excited to listen to him what his ideas will be. So thank you very much. Take care. Stay healthy, all the best. Bye.
Klaus left. We are still here. So if you want to continue, go ahead.
We will now take the next question from Guido Hoymann from Metzler.
Three questions left from my side, 2 on RE and 1 on Global Produce. On RE and regarding your developer business, now after we have received the specifications from the so-called Easter package and the plans -- the expansion plans in Germany, are you planning or have you already exercised that to increase your exposure to the German market? I remember that you think that your exposures are in the pipeline. For example, Germany is just around 10% if I remember right. So are you increasing forces here in Germany?
The second question on RE would be on the IPP portfolio. Can you just please remind me where you are now with your IPP portfolio, where we stand now with the IPP portfolio?
And the third one, the last one, on Global Produce. You mentioned, if I got it right, EUR 7 million licensing earnings. So is that a onetime payment? Or is that recurring? So will we see that in, whatever, every year or so?
Yes. Thank you. I'll start with your RE question on the development business here in Germany, in the Easter packages and so on. To be honest, no, the focus is not as it was in the past in Germany. It probably give stimulus on the solar trade business here in Germany because there our customers are these craftsmen and then small installation companies. That might bring an impact on that, but the demand on solar models is as high as it is without also the German market.
The focus on the project development in '22 and the ongoing years would clearly be in the U.S., in Europe, in the Nordics, in France, in Spain, in Asia, but not in Germany. We always have these ongoing discussions here, in particular, in Bavaria, which it's not going on the solar business. But on the wind craft, it goes up and down. And now the reigning party here in Bavaria tries to find a way out of this miss or mess. I don't know if they will find a way out of it, but we are not going to wait until that. So no clear answer. It has not -- we are not building up forces here in particular in Germany as a reaction of these Easter package that you mentioned.
The IPP portfolio, so far in the first quarter, nothing has changed, to be honest, towards last year -- the end of last year. So we already planned -- we just plan to start to increase the IPP portfolio within or throughout '22. By the end of '22, though I guess the latest number that I had was something 700 or 800-megawatt, is so far included as IPP in our own books. The 500 megawatts came out of these old projects that we inherited from the former owner, you know that, La Muela in Spain and so on. So this will -- and I want to remind you, the plan is to build it up to 2.5 to 3 gigawatts in the years to come. So that will be probably one of the focuses in '22, '23 and '24.
Finally, the question on Global Produce, there was slightly misunderstanding. The EUR 7 million was the contribution of the licensing fee last year in total. So the -- for -- now for the first quarter, it's EUR 3.6 million as license fee included in the EUR 7 million. Just to correct it, if that came out wrong, EUR 7 million was the whole contribution in '21. For the first quarter, we already made EUR 3.6 million. And you are right, this is not recurring. This is -- these are onetime license fees. But we always have new customers to come, and the marketing of these licenses, instead of doing own growing operations or partner growing operations, this is the new business arm. And that's, in particular, important for our Chinese business. The question was are we going to do own operations or will we participate in operations in China. You know that we have within T&G and Chinese partner with 20% in the operations or in the business. And that was a discussion we had. And finally, the solution comes out to do it while licensing, and that's one part of that business. But it's nonrecurring, so to say.
[Operator Instructions] We now take a follow-up question from Oliver Schwarz from Warburg Research.
Firstly, I heard what you said about your planning regarding the fertilizer business, Mr. Helber. However, let's just pretend or let's just assume the scenario of [ Dr. Lutz ] would become reality, the fertilizer prices are staying up. We managed to model through, so no major, let's say, exogenic [ shocks ] by, let's say, a shortage of natural gas or something of that matter. If those prices remain at the current level, let's say, to the end of 2022, would you be willing to buy, let's say, the normal amount, the normal volumes, if you can, for the year 2023? Or would you say that is a lot of working capital, and there's always the downside risk that prices might not hold up in financial year 2023 for whatever reason? So we are -- might be rather prudent and saw less fertilizers into our inventories in front of the -- or before the next fertilizer season?
Yes, Mr. Schwarz, this is very clearly, there's a very clear answer on that. And I'm looking on Marcus, who's responsible for the Agri. I might quote him from what he stated in the Supervisory Board yesterday. We will not do that. Of course, not because we will not buy as usual amounts and volumes if the price stays on that high level. We experienced that.
If you remember, I don't know if you have been on Board in 2008, 2009 already.
I was.
Of course, when we realized the first fertilizer shock, you remember, that was quite a similar situation. Prices went up. Management did the usual business. And then by whatever happened, the prices went down dramatically. And we created a loss of EUR 75 million in this very 1 year. So we will learn from that, and we will definitely not do that. And Klaus -- Marcus just said yesterday, what we will do then is just a back-to-back business. We will buy from the industry, and we will immediately shift it on to the customers. We will not take -- to a certain extent maybe, to be able to deliver to smaller customers, we will probably not take a huge price risk and inventory risk. And that's not comes with the capital requirements. It comes more with the risk that we would take in our book sales. Suddenly the war ends, what we all will hope that the war ends, the pricing situation is completely different. And the prices rushed down from, whatever, 400 to 200. So then we would be the blamed ones, and we would definitely not do that.
Therefore, the second half of the year, as we said, and this is one of the explanations why we are not saying, okay, we have already the EUR 60 million. Yes, we will get out at EUR 80 million or whatever, that would not be serious because the second half of the year would be very exciting both on the fertilizer business and as well on the intake of the new harvest.
Understood. Just as a follow-up, when you mentioned those plans for a back-to-back business, we are talking about huge volumes here. Would that require that you flag to your customers that they might not be able to get the, let's say, the full volumes that they like to order with you as a result of, let's say, that's just in time management of sales in regards to the shipment of the respective volumes?
Yes, that might happen. Marcus is nodding. Yes, that might happen. We both agree on that.
Okay. Cool. Very clear. And secondly, I know that so many moving parts now in the Agricultural business, and I appreciate that. But when trying to judge from the outside, you made, let's say, quite significant improvement in the quality of your portfolio, taking on specialty businesses in the past years. Obviously, their impact is now limited due to the large windfall problem there -- not problem but profits, obviously, EG from fertilizers and such. But if you, on a sustainable -- to get a more, let's say, a better view on the sustainable development in the coming years, when looking on your specialty business, would you say that the contribution from those business is currently significant? And has it increased, let's say, year-on-year significantly?
Yes, definitely, definitely. If we particularly look on the international trading, Rotterdam-based Cefetra Group, 50% out of this profit that they contributed last year, it was around EUR 40 million in total, came out of the specialty business, which has not been there a couple of years before. And also within Agri here, the domestic business, Marcus and the team are focusing on forcing the specialty business, so the contribution out of it will be quite significant also in the future.
Okay. But has there been an increase, let's say, for example, in quarter 1 2022 versus quarter 1 2021 in EBIT of those specialty businesses? For example, the exotic fruit business obviously is likely to suffer from higher logistic costs.
Yes, right. TFC on the Tropical Fruit business, that was, let's say, significantly, if you take it year-on-year, they contributed EUR 300,000 for the first quarter compared to EUR 1.3 million the year before. So this is also the business to come at Easter, midyear and then at the final quarter. So that took nothing that is -- nothing that makes us worry.
But on Cefetra Group, on Global Produce, let's say, the specialty business out of the EUR 17 million that Cefetra Group delivered in Q1, I would slightly guess that 2/3 out of it comes from the specialty business. And what we know what will come in the second quarter would be even higher.
Very clear. And just to squeeze one and last one, the traditional Energy business, I guess in regards to heating oil, prices went up quite dramatically especially in the month of March due to the spike in overall crude oil, natural gas and so on costs. Despite that, I guess, a lot of people, due to their -- let's say, the ongoing uncertainty, they were still willing to source heating oil to be, let's say, on the safe side of things if push comes to shove. Is that effects, from your point of view, is that over? Is that -- or is there more to come also in Q2 and even probably in Q3?
Firstly, you're absolutely right, what we have seen partly in the Q1 are these, let's call it, panic purchases, yes, people are expecting higher prices. They even buy. That's what trading companies often sees in rising price scenarios. So this is one thing.
But the other thing, roughly half of the contribution -- I mean, we are only talking about 4 only, be cautious. But in the winter quarter, the first quarter of EUR 8.4 million, you remember, we had a very [indiscernible] year in year 2020. COVID and pandemic-driven, it was more normalized in 2021. So -- but you know the seasonality in the classical energy business, strong Q1, strong Q4, a lower second quarter because then we go into the summer period, and then it starts only after August. And this is a quite normal seasonality that we have in the heating oil business, but the half of the contribution, which has been seen here in the first quarter, came also from Austria. And there, it was fuels business.
So that was, of course, partly because of the higher margin and the price rises that we saw at the fuel stations. The colleagues, in particular, in Austria benefited from that. So it's not all driven by consumers and panic purchases that made the EUR 8 million in the first quarter happened.
As there are no further questions in the queue at this time, I'd like to turn the call back to your speakers for any additional or closing remarks.
So thank you very much for your participation. As we mentioned before, after a long break, we are looking forward to organize the Capital Market Day again. Probably it will take on the 30th of June this year, but all information you will receive soon, but I would welcome if you could block the date already. We wish you reporting -- a successful reporting season. And for all the Frankfurters among us, crossing fingers for the game tonight. Thank you very much. Bye-bye. .
What will happen tonight? What is happening tonight? Are they going to lose [indiscernible]?
Okay. Thank you. Bye-bye.
Bye.
Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.