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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Hello, and welcome to the BayWa AG Analyst Conference Call Q3 2022. Please note, this call is being recorded. [Operator Instructions] I will now hand the call over to Josko Radeljic, Head of IR. Please go ahead.
Thank you. Good morning, everybody, and welcome to BayWa's conference call on the result of -- on the third quarter results of the fiscal year 2022. All relevant documents have been sent out this morning. I think the group EBIT result is not a surprise for you anymore. We have announced that on the 25th of October of this year. Additionally, we have also raised in this message our full year expectations for the year 2022 up to EUR 475 million to EUR 525 million. Today, Professor Lutz, our CEO; and Andreas Helber, our CFO; will elaborate on the main reasons for the strong performance of the year. I will hand over now to Professor Lutz.
Good morning, everyone. The 58th quarterly report from my side since I'm Board here in BayWa, and it's the last quarterly, and the last final destination will be the end of March next year, where we provide the balance sheet and annual report to you for '22.
So you were informed just this morning about the extremely positive development of BayWa over the last 9 months in '22. This is really an extraordinary result, extraordinary development. And Josko mentioned it already: that is the second time in 1 year and second time in nearly 15 years where we provided a so-called ad hoc message to the capital market to make announcements regarding the potential increase of our profitability. And so far, we are very proud of having such an extremely good, extremely positive development.
So what is the reason? The first thing, and I call always -- tell you always the page which I am explaining. So we come to Page 4. The revenue is up 42%. More than EUR 20 billion. This is really outstanding. Many years ago, we had EUR 7.5 billion revenue in a year, which is now more or less the quarter revenue. But it's mainly driven off the price developments in our different business models and the different market segments. It's not volume driven.
The interesting thing is more or less every business segment is providing its share for the increase. And the improvement of our profitability is also the result of the trading opportunities, especially in the agri business, the open contracts, which are fulfilled now and which we had at the beginning of the year already in the books, but [ now ] the result is key. And of course, our trading activity in the renewable energy business, the solar module trading and all the devices is on an all-time high at this point in time. And we do not see an end of this interesting story. So included in the result of EUR 460 million is also the sale of our climate greenhouse. We informed you last time already that we are going through this process and 31st of July, we had the closing. And also our selling activity for the Bioenergy sector to Macquarie, the closing was in the end of September '22, where we created EUR 35 million profit on EBIT level. And interesting for you guys, of course, the development of the earnings per share.
Just one comment because we have this change in the top management and the new CEO is sitting next to me, Marcus Pollinger. Ladies and gentlemen, it's extremely important that the outlook for the next years -- of course, the parameters are unclear. We don't know what's going to happen. And on the political side, on the global political side, we don't know what's going to happen in the natural resources business and commodity business. And so far, it is not for granted that in the next years, you will see a similar development and a similar upside. I do not think that this is realistic and so far, just enjoy the figures we have right now. And what's going to happen is right now also in the budget process where I am personally not anymore really involved because I'm going to prepare myself to become Chairman of the Supervisory Board, and we are in a type of exercising mode, Marcus and myself, that we have really well prepared plans for the end of March '23.
Turn to Page 5 to see the comparison of the EBIT development in third quarter over the last years. And you'll see just a few years ago, in 2018, we had a loss situation. We were relaxed at this point in time because we knew that, especially over the last weeks in the fiscal year, a renewed balance sheet is going to provide nice profitability to our P&L statement because this is one of the key pillars of our business in the future. And it was a significant part of the business and the performance contribution over the last years. And so far, our strategy came 100% true, which is exceptional as well. And Page 6, you see the comparison over the last years. And here, again, we had years 2020, 2019 or 2018 where we were faced with really absolutely different figures regarding the first 3 quarters in a fiscal year. If we come to the energy sector, please turn to Page 8, Renewable Energy and Market Development. You know this comparison on the left side of this chart. It's always the same, more or less. The tendency is intact. There are no changes. Also, the solar business has a really good, good future ahead. The average growth rate from the volumes to be installed on a global basis was 21% and expectation over the next years is going to increase as well.
On the right side, you see the average electricity price. I'm still tired by the way, I don't know. It may be the age.
Electricity price, I need not to comment on that. You are more than familiar with the gas stop from Russian side and all these linked issues we have to handle. And for me, it's very important by the way, to explain to you that the overall picture of BayWa, and especially here in the energy sector, has nothing to do whether as a result of the war situation in Ukraine. This is not true, and you are probably not surprised that we are also in different positions. We have and especially myself as head and President of the Chamber of Commerce in Bavaria, that we are fighting such ideas of additional tax laws in Germany because our international and global competitiveness is already really under pressure. Turning to Page 9. You'll see here the average heating oil price development where we have an excellent result in the fuel costs in Germany. The comparisons are over the last years. I do not want to comment that because it's self-explaining. Page 10. First of all, the revenue, EUR 4.5 billion. This is really surprising, was surprising to me as well because normally, the revenue is not so critical due to the main focus of this business, the pillar on the development of wind and solar facilities. But this year, trading activity, as we saw it already in the last fiscal year, the trading activity for the photovoltaic business and the modules and converters and all these devices has an up of around about 80%; the converters, 61%. You see that in the explanation of the EBIT development.
We had some disposals of key projects. But we are not through all these plans, transactions already, as always, over the last weeks. This year, we expect 2 things. First -- the first thing is, of course, that we sell some projects all over the world, more or less and to get -- and that's important afterwards for Andreas Helber to explain the debt structure of our balance sheet to gain liquidity back from these sales activities.
And as I mentioned already, it's not only trading of PV components as a key factor of this good profitability. It's also EUR 35 million portion regarding the sale of the Bioenergy business to Macquarie.
So end of fiscal year in the RE business, we expect again a record high, not only in sales but especially on the EBIT profit level. So there's a lot to come still over the last weeks, but we are used to that because this is the business model. Turning just to Page 11. You see here, it's just to give you a feeling, vibration, what's happening in this business. You see here a floating PV project in the Netherlands, which is very successful and this is an interesting technology developed by our colleagues in the Netherlands. And I think this will have really bright future as an export part of our business model in the RE sector in the future. In Germany, we are very restricted with such type of PV projects because the legal situation is ridiculous, nonsense, stupid and reflects the brilliance and intelligence of our federal government. Has to do maybe with education, by the way. Turning to Page 12. The Energy segment, let me say, the normal energy segment, fuel, heating oil and, of course, lubricants. You see again an increase on the revenue side of EUR 2.4 billion and EUR 45 million EBIT. It has to do with the price development, but also the high demand from our customers in the heating oil, and we have an uplift in the fuel business. After the pandemic situation, there was an increase on revenue and also the margin situation was very positive. We have a lag in the lubricant business because the ingredients for this type of product has a decrease of around about 10%. They are not available in the global market. And it's nothing to do with the outlook regarding the economy itself. It's just a question of procurement, logistics management and all that stuff. We come to the Agri business, turning Page 14. This is one of my favorite charts because here you can see what is going to happen in the commodity business. And you see that we are really living from the stock more or less. The storage is down minus 16 million tons. And the production and the consumption is more or less on the same level. At this point in time, we do not -- on the short-term basis, we do not expect any starving catastrophes in northern part of Africa and in some Asian countries or in like Africa. We do not expect that at this point in time. Maybe due to the significant reduction of production and the growing activities in the Ukraine, in the upcoming season, we can maybe see some really -- from a human point of view, really big, big issues. At this point in time, all these countries bought as much as possible and available in the global commodity markets the grain they need for the fundamental feeding of the population. Turning to Page 15. The market developments in the commodity side. The volatility from a principle point of view. The increase of the prices, we are, of course, a little bit in the positive shape due to the brilliant and intelligent trading activities, especially here in Munich due to the open book situation we had at the beginning of the year, but of course also our partners and our friends in the Netherlands, Cefetra. Also, we reduced significantly the volume to be traded because the main focus there is in the future. And as it was over the last years and you'll see it in a second on the results side, the specialty business. Turning to Page 16. Of course, the fertilizer, that's the key one from the Agri Resources business, the fertilizer business saw some high prices due to the energy costs and the availability and the logistic issues in the market. We handled that very adequately and properly, and for us, it's one of the key drivers for this excellent result. The fruit business. We were faced in '22 with a loss of volume and some quality issues due to the weather in New Zealand and, so far, this is the only unit you will see that where we are behind the fiscal year.
Coming to page 17. Cefetra Group. Outstanding: EUR 4.6 billion; 52.8 million profit. The key driver is the specialty business. And here, our participation or the stake we bought in Royal Ingredients, some years ago, this is really outstanding. The specialty strategy came more or less 100% true. And so far, it was expected the right step forward a few years ago to change a little bit the structure of the company coming from a pure procurement, supply chain management of commodities, especially soya from Latin America, to a more specialty-oriented trading organization with a global reach and the results show the success of this strategy implementation. We come to Page 18. What is this? Agri Trade. And okay, this is -- indeed, ladies and gentlemen, this is incredible. You see an increase of 40-something percent on the revenue side, EUR 4.4 billion, but the profit is EUR 152 million. And I tried it already. Of course, it has to do with the good positions we had in our book for the commodity trading. The fertilizer business was supporting this excellent result. We had some strong earnings in RWA in Vienna and the operations in Eastern Europe where we saw over many years just losses and now it's extremely profitable. We're happy with this development and we don't see a downturn in '22 in the final race for this fiscal year.
Turning to Page 19. And again, the Agri Equipment business is in a very good shape, still in a very good shape. EUR 1.5 billion; EUR 47 million EBIT, it increased more than 80%. This is really outstanding. The reason for that is we have growth in revenues and earnings due to the increase of the machinery business, especially with the tractors and harvesters and so forth. But also, our service business is in a much shape as the years before. And there, in this point in time, we were excellently positioned already. So that's interesting.
So the farmers are spending money for the machinery business. Has to do, of course, with the good earnings situations on the farmer's side, but also our handling with the stock inventory for the technology business within BayWa. Turning to Page 20. As I mentioned already, the global produce segment is a little bit behind the previous fiscal year -- stable. And the revenues side -- and the reason for that is the quality issue in the volume in New Zealand, but also the problems of Tropical Fruit Company in Maasdijk in the Netherlands. Without Tropical Fruit procurement to the retailers here in Europe, the demand was not bad. But the supply chain was broken more or less, and we have a hard -- still a hard discussion with all these retailers because the low prices marketing approach is back. We will see what's going to happen here. Turning to Page 22. The Building Materials segment is still intact. Nevertheless, the increase of interest rates and inflation. And so far, we believe that over the next years, we will see a little downturn here. Nevertheless, the change in our product segment and also the start of the project business development within the BayWa building -- project building company is the new mix is more -- I would say, the business model is much more resilient as it was in the past. And nevertheless, we will see some cooling down in this business pillar.
So turning Page 23. EUR 1.7 billion revenue and EBIT is EUR 65.8 million. Really outstanding development over the first 9 months.
So that's my general comment on the operational development, and I hand over to my friend, Andreas Helber, to explain now the real reason why it is and it is not different as it is.
Yes. Thank you, Klaus. And good morning, everybody, also from my side. Turning to Page 20. What is it -- Page 24 and beyond, slightly going through some financial comments. On Page 25, you have as you are used, the other activities. I know you are not so much interested in what is in, but where will it be at the year-end and we'll have a focus on that. Other activities include, as you know, all the general expense on corporate and overhead and things we do over the year. And you see some comments on the increase, the slightly increase of EUR 20 million compared to the year before. We took some very prudent approach on our real estate portfolio going through, increasing some provisions as you might consider this good results in our back, considering some provisions for demolition cost that will come in the future within our portfolio. We took that in advance.
One hit was, of course, the insurance premium on the D&O. We talked about that in earlier conference calls as well. That increased sharply from some couple of hundred thousand to an amount of nearly EUR 6 million for the full year. This is also included in here. We took some additional costs for increasing IT, cyber security. That will be a project that will cost us at least over EUR 30 million over the upcoming years. So what we can do already in this year, we will take it in as we can.
And finally, and also that has been reported in prior calls already, we -- lack of the bank dividends from our Austrian friends, Raiffeisen International. They failed to pay dividend for '20 -- or in 2022. Nevertheless, they have a wonderful result, as you might see on their comments. But we do not expect finally to get paid in '22, but hopefully looking on 2023. Overall, not the individual guidance given for the segments, but here for the Other Activities, I think you might think that we come out in the range of 90 to 95 for the full year's perspective being the relative number from the previous year at 81. So it will be slightly increased, but of course, taking into the measures we are taking now more or less in advance. The next 3 pages, I flip over the next 3, they are lovely to look at and we could spend hours to look at it, but I think it's just a summary of the individual segments we have been going through with Klaus. So I can skip this. I will come back to the Renewable Energy sector in a minute when I'm going to look on the balance sheet.
But first on -- it's so small, 28. Is it 29? Yes, I need glasses as well. 29. The income statement, the summary of the income statement, with the all-in numbers. Revenues after 3 quarters are already above EUR 20 billion Interesting and also important for the view on our balance sheet KPIs is the EBITDA already increasing last year's full year number, of course, with EUR 650 million after 3 quarters. And that's important. I expect it over EUR 800 million something, EUR 850 million maybe for the full year period, and that is important if you consider the leverage. The leverage will stay - even the balance sheet numbers are somewhat higher on the seasonal topic of September results, but I expect it in a range of 4 to 4.5 for the full year number as well. And I'm coming back to this in a minute again.
The EBIT, outstanding. EUR 460 million, all has been said on this. And the earnings per share, also only a snapshot, but it's such a lovely snapshot with over EUR 4 after 9 months. So it's important to mention.
Turning back to Page 30 on the balance sheet. And you see a sharp increase of the total assets, the summary of total assets on the balance sheet after the 9 months, and this is reflecting sharply the very long business that we had not only over the full 9 month period, but also, in particular, in third quarter. Klaus showed it in the beginning that the third quarter, which is -- and those of you running with us for many years know that the third quarter normally is a working quarter or cost quarter. It's not such a big EBIT contributor normally because this is the harvest quarter of Agri business. Though mostly also from the renewable, the results have been expected to come only in the final quarter, then -- you know the story.
But in particular, this year with at least EUR 130 million reflecting this again, EUR 130 million contribution only in the third quarter. And this has been reflected in a very high level in accounts receivable. Accounts receivables are up by EUR 1 billion in total, by EUR 1 billion compared to year end last year as well. So this is a very good portion because with Day Sales Outstanding of some 30 days, you might consider that this has already been turned partly down in October. So having this very strong business in the third quarter has been reflected on the accounts receivable side on one hand, EUR 1 billion out of the EUR 2 billion increase in the some total asset number. And then the other EUR 1 billion goes completely into the inventory side.
So this is the very high portion of inventory on commodities that we stored in. The harvest period was earlier this year. It has already been finished with the end of the third quarter. And in total, we have an amount of EUR 1.35 billion on inventory putting everything together, wheat, grain, feedstock and oilseeds. But this is comparing to a number of EUR 800 million the year before. So this is one of the main reasons of the sharp increase. And this is good news because this is the marketing potential that we see for Q4, but in particular, from the Agri business also for the first 2 quarters in 2023. And therefore, we are not so pessimistic also on the next year to come.
So these 2 aspects should be considered. If we look on the balance sheet statement, both are in the very liquid short-term assets. Both will be reduced by the end of the year. The inventory level is already on its mostly highest peak. So we expect it to come down by the year-end.
In particular, that brings me to the last point, the renewable energy business. We know that you always count on the megawatts sold so far and the megawatt sold to come and just to give you an update on this. We initially announced some 1.2 , I guess, looking at Josko -- 1.2 gigawatts to be transferred over the year. And you always know the story that it might come to postponing; it might be reconsidered over the year. And having this wonderful result on the Renewable Energy business, mostly driven by the solar trade business and the energy trade business -- some projects will be postponed in an amount of some 200 megawatts to 240 megawatts into the next year, first or second quarter in 2023. Good news also for the result perspective on the Renewable Energy business in the next year. And in the fourth quarter to come, I just overlooked it, roughly 300 megawatts are still outstanding to come in the final quarter. And again, it will concentrate -- I must say, we are already in the middle of November now. So these next 6 weeks or 4 weeks are very interesting to come again. But at least, I think we are in a very good process-wise shape to bring these projects over the line and at least news for me, as a CFO, mostly important, the cash back into the books.
So I think that is it mostly from that perspective, just on the snapshot for the 9 months period. And given that we already had the outlook given mostly with the individual segments, we are through and I guess, now ready for questions.
We're now ready for the questions. Thank you very much, Mr. Helber. Thank you, Professor Lutz. Now it's your turn if there are some questions left.
[Operator Instructions] We will take the first question from Oliver Schwarz from Warburg Research.
Congratulations on the impressive results. Very well done, I guess. However, the changes with the -- let's say, outlook for the full year, even given the increase in guidance that we saw at the end of October. But if I take the lower end of the guidance, we are heading for only EUR 50 million EBIT in Q4. And after all your comments on how business is progressing in the various segments you have, I'm still at a loss to explain how that decline is to be handled.
Firstly, you stated that you are heading in the RE business for give or take, 1 gigawatt of projects to be sold by the end of the year. So the 1.2 gigawatts minus the 200 megawatts to 250 megawatts. At the 9-month stage, you were at 423 megawatts. So there's, give or take, 550 megawatts to come only in Q4. And this was one of the main drivers in the past, why Q4 used to be the seasonally strongest quarter in regards to EBIT generation. So I'm still puzzled why this shouldn't be the case in this year. That would be my first question.
Could you please elaborate a bit what conclusions are driving you to an outlook of EUR 475 million to EUR 525 million?
Mr. Schwarz, I'll take this question, if I may. The question that I expected, and I did not sleep the whole night because I was expecting this question. No, you're absolutely right. But if you know you have to give a guidance when it comes out. And we have a perspective and I turn it out a little bit away from the megawatt numbers. I think we could deeply elaborate on the individual numbers, but there are projects right in the sales in the megawatt number that I mentioned. These are really projects being sold.
But as you know from the past, it's never that you can multiply 1 megawatt with respective amount of that EBIT. That does not work. But nevertheless, I guess coming from the 9 months result on renewable. That sums up to 160 -- around about EUR 160 million. And I guess that we will come into a range of EUR 220 million to EUR 254 million in the Renewable Energy business.
That's what is the potential of those projects that are -- that will go over the line. But as I said, other projects will be [ capped ] back into 2023. And to be honest, looking on this, I think these are the more profitable ones. So do not expect the trees to grow into the sky too much on that aspect. But this is one thing that will -- as we already said, considerably contribute into the final quarter.
The setback a little bit, it's on the Agri business. And if you look on the seasonal, yes, the seasonal flow of the result, considering that we had very strong 3 quarters on the Agri business so far, the forecast that I have in the system is somewhat prudent approach coming back this 150 into a range of 90, 95 to 100. That is the one part that we have to reflect and that always come in the fourth quarter if you are looking on the results area because the most part of the marketing potential is to be sold in the first 2 quarters in 2023.
So these 2 aspects are mostly offsetting a little bit. And that might be -- we are a little bit prudent. I don't want to go back to the market in whenever early next year and then saying, or the situation was that we did not make it to the final EUR 525 million or EUR 500 million around about. So you are right, a little bit prudent, but I guess this is something that we really could achieve. And the distance from the -- to the lower gate of the guidance, yes, I know that's really only a short distance to go.
And if I might comment on that as well. So to be honest, this is the reason or was the reason why we didn't provide to the market top messages regarding the business development -- no guidance -- just the explanation of potential results because we are in a very volatile business. We are careful. We take care of our shareholders insofar as we do not want to overstate it because this is very critical. And my recommendation for the new management will be never give a clear guidance. Just explain what will be expected in a fiscal year and then you can avoid such type of discussions. It's not critical towards yourself now, of course. We highly appreciate your question, and it was so clear that it's coming from your side that Andreas and myself at 6 in the morning discussed over the phone, what should we tell Mr. Schwarz now.
I am very sorry to hear that. I don't want to be the cause of you missing your sleep.
Well, the management gets up here at 5:30 normally, yes.
So you had 30 minutes of additional sleep because you were aware of my question. That's good.
My next question more or less are housekeeping ones. So probably also expected, but not so difficult to answer, I guess. Can you quickly elaborate on the -- on your inventory situation regarding fertilizers? We saw prices spike to new heights in the first half of this year. Prices in potash has come down considerably since. In nitrogen, we saw a somewhat reverse situation compared to potash with prices going up due to the higher natural gas price, also input costs and idling of respective production facilities, especially in Europe here. So everybody is quite on the edge regarding whether to buy or whether not to buy. What's your trend? How is your inventory situation at the moment and how do you plan to proceed from here?
First of all, as always you know, we are hurt -- we were hurt many years ago with this fertilizer stock inventory, where we were faced with a loss of a few 26 or 28 or whatever million within a few days. And so far, we are very careful in building our stock inventory for the upcoming season in March next year. And from a volume point of view, I don't have the figures. Who can share that?
I'm not quite sure, but I guess was it 75,000 tonnes compared to a hundred...
75,000 tonnes. Exactly, 75,000 tonnes in comparison to around about 100,000, 120,000 tonnes.
And mostly sold.
And this is already sold. So our risk, and that's the important one, our risk affiliated to this is very, very small.
Okay. Wonderful. And a last one, and then I go back into the line. The -- can you remind me of the gain you made from selling the greenhouse business in the Middle East.
This is in -- this gives around about EUR 8 million.
The next question comes from Guido Hoymann from Metzler.
Three questions from our side, please. The first one is regarding the Building Materials business. We are seeing, obviously, a sharp interest rate induced slowdown in the real estate markets or housing and building markets. So how high is the share of refurbishment and installation products you're selling there, i.e., how much of your business might prove to be more robust or resilient because of all the probably ongoing CO2 reduction efforts? So what is the, let's say, robust share of your sales there? The second question is addressing the Renewables business. What sort of price cap do you expect for the renewables? I don't know if you have an idea there or some insight. And did you benefit from the high electricity prices in a direct way? So have you been selling to the spot market in last quarter?
And last but not least, back to the Building Materials, could the residential developer project you're operating, could they run into problems? So how much -- what is the percentage of projects you have developed but not yet completed and sold?
So let's start with the third question. There is no problem. We don't see any issue here. And we do not see that we can't sell anything. And with residential, you mean residential as a whole, and residential regarding the solar module on the roof? Is this what your question includes as well?
No, no. No, that was actually really building construction.
Okay. The building materials -- you mean the projects to build apartments and stuff like that. There's no problem at this point in time. We have 1, 2, 3, 4, 5, 6 big projects under construction at this point in time, supply chain procurement and also the sale of the apartments is not really an issue. That's the answer for question three. Question one, interest rates. Well, our business was completely restructured over the last years to make the business outcome much more resilient as it was in the past. In the past, we were only a general building material distribution company, which is not anymore the case. We have a lot of specialty. So similar development as we have it in Cefetra in Rotterdam. And the project is a very stable, very resilient. And of course, it has to do with the high and always higher demand for flats in the areas where we are in the business. Because of the growth of the population, people need apartments and so forth.
And so far, the interest rate will have an impact, of course. But a real downturn or a crash or something like that is not to be foreseen from our side. Maybe we have a cooling down over the next years, but it is not so significant that we are falling back to, a, let me say, even negative results or a low profitability as we were faced with -- in, let me say, 10 years ago. So the business is much more resilient due to the diversification of the building materials sector. Then the second question, price cap RE. That's an interesting question, of course, because it is at this point in time, absolutely unclear how the administration will be, how the structure will be. All is unclear. And so far, to answer the question would be real speculation, which we do not want. And the [ take ] for this windfall profit tax, the basis for it is completely unclear. Why? Because we have different definition of profitability. Some of them are talking about earnings. Well, I don't know. I really don't know. It shows you the foolishness of the government and the people who are in charge. Second one is, of course, we are benefiting from the sale and the trading of electricity, of energy. And so far, it's a positive development for us.
If I may add some numbers. We are, of course, as Klaus just said, we're carefully looking on the papers that are coming through the Ministry of Economic daily you might say. Every morning comes a new one. As Klaus said, it's completely unclear. But reflecting on what we do is affected here by this paper, by this discussion is only the production of our own IPP here in Germany so far.
So if we look on the contribution of the whole IPP portfolio, and this includes also the energy trading in the current year. Some of the EUR 160 million profit that we had so far, roughly EUR 70 million comes of the energy trading IPP and thereof, the half of only the energy trading, which is not affected from this upcoming rule right now. So the overall impact that we might see affecting our own operations is in a range and that was the best guess that we got from the [ collects ] on the RE business in the range of EUR 3 million to EUR 5 million.
But it depends on the definition of the basis for the calculation, which is completely unclear. And the second one is there are also discussions in Berlin to have a much broader scope of this approach. And if this is the case, then we had really a problem if the distribution business is part of what would be part of it. So there's an internal discussion. I don't know the outcome. My Managing Director of the Chamber of Commerce is part of this committee and the task forces and blah, blah, blah. The feedback I get there is really just from an intellectual point of view, a complete disaster. But this is not surprising to us as citizens of this country. And so far, I don't see at this point in time, really danger for our profitability coming from any supertaxes and whatever.
The next question comes from Sven Sauer from Kepler Cheuvreux.
I actually only have one question left. I was wondering if you could maybe update us on the restructuring process in the Agri Trade business. Is this completed now? Or will it be completed by next year?
That's a process, which is meanwhile, many years. A few years ago, we started with the process and it takes time, of course, because we have to close shop sites, especially in the southern part of Germany. And to reinvest money in the new higher tech sides. We are focusing on the areas where the Agri business will have a future. Where we have enough farmers to provide the commodity to BayWa and also to buy our Agri resources and machinery business. So that's a process.
We are -- as we announced already several times, we are decreasing the number of sites in our reach. And so far, that's an ongoing process. Important is that the steps -- the new management took under the leadership of Marcus Pollinger. And maybe you have read that, that the Supervisory Board announced yesterday -- appointed yesterday, Dr. Marlen Wienert, the first female in the Board of -- Executive Board of BayWa. She is in charge for that.
And the key success, and that's 1 of the reasons why she got the job, is during this restructuring process, to combine the machinery business and I call it classic agriculture sector to create synergies and cross-selling and omnichannel activities in the market. And this not -- we are in the agri business, that people are very conservative. Also, the e-commerce business is going to increase, but not with the speed you are familiar with in other industries and insofar it will take time, step by step to move forward. And we need to be very careful with our customer base because BayWa as not a moderator, but the distribution partner of the manufacturers, BayWa's USP is the close contact, the personal relationship to the farmers and to the agri businesses. And so far, we must be very careful how fast we restructure this business segment.
Just one quick follow-up question. I was wondering if you could provide some info on why you sold the Bioenergy GmbH to Macquarie and why it didn't fit into your portfolio?
Because we are focusing on wind and the solar business. That's the one thing. The second one is as an agri trader, you have always the discussion of which is much more important: food or fuel? Food, of course, and then fuel, that is clear. But this can create also some turmoils within our customer base, but also for the capital market. You need to be focused on what you are doing in the renewable energy business.
And our plan, the budget until '28, which we agreed upon with our partner EIP in Zurich, includes project development of solar and wind facilities plus and IPP and some trading activities. But the main focus is the development of projects, to sell the projects and to create over the years an IPP division to have a running income, which is very -- from a calculation point of view, easy to be calculated from your side, from our side and also to make the business, to use this fashion word, resilient. So far that's just a logical point.
We still have some biogas facilities left in our portfolio where we are in the sales process, which is not really stock exchange relevant because they are minor issues. Nevertheless, we are divesting all activities which are linked to the biogas business.
The next question comes from Knud Hinkel from Pareto Securities.
I've got 4 questions left. First one is a follow-up question on Agri Trade and service. I would be interested to learn if the current good earnings situation changed a little bit your restructuring program, so if you, let's say, consider that maybe you don't cut back as much as you have intended back when you started it? So that would be my first question.
Second question, you, Mr. Helber, you began to give a breakdown on the renewable energy contribution from different activities. I want to encourage you to go ahead with that and maybe say something how much did projects, just ballpark numbers would be helpful -- how much did projects contribute? How much trading, how much IPP? And you already said that EUR 35 million came from a one-off profit. So would be also helpful.
Third question is on the dividend. You paid, if I am not mistaken, you paid EUR 1 last year. I know that's up to the Supervisory Board, that's clear, but you will propose something. Do you intend to raise the dividend as much as the bottom line? Is that something you can imagine?
And final question is on the development of equity. That is only up by EUR 50 million, and I just skimmed over your Q3 report. I couldn't see anything. Maybe if I have to dig deeper why it's just that small amount compared to the fantastic numbers you presented. What's the reason why equities are up just by EUR 50 million? That will be it from my side.
Thank you for your questions. Starting with number one, change in the restructuring process due to the good earnings situation. Of course not. We are encouraged to move on faster.
The third question, the dividend. Second one, Andreas is going to answer. The first question, dividend, we paid EUR 1.05 last year for '21. Now for '22, of course, we are in the preparation mode to discuss internally an increase of the dividend, which will take place because this is tradition in the BayWa dividend policy. And by the way, we don't have an official policy but just give the money to the shareholders where we think it is adequate and useful on the basis of the decision of the AGM, of course.
And I just want to say, yes, there will be an increase. But no, it is not in proportion to the increase of the profitability because we must be careful. We don't know what's going to happen over the next years. We need to keep our business together, our act together, and we will -- no one exactly knows what what's happening in the global markets, what's happening with China.
If I listen to some of these brilliant politicians, what they intend to do in China, this will affect, of course, our business. What's happening with the awful war situation in the Ukraine, the sourcing for the international agri markets, big question mark. How is the supply chain broken or not or whatever -- well, that's really black box. And then so far, there will be, of course, an increase because the shareholders will and should and have to participate in this great success. But you can't use the formula last year profit like this, a dividend like this. And now, let me say, the same logic behind. This is not -- wouldn't be the right approach. And the 2 questions, Andreas, equity and the other one, if you are going to answer please.
Starting with the breakdown on the renewable level, it's not a secret. I mean, I already mentioned that the most -- the 2 largest EBIT contributor after the 9-month period is the solar trade, the module trade business that comes along with some EUR 100 million on total EBIT. So this was really an outstanding business here in '22.
And the second one I already mentioned, that is the IPP, including the energy trading business that comes with some EUR 70 million. And if I take all the others together, you might say we sold this -- the one or the other solar projects, but taking also the cost side -- this was nil contribution so far, as planned. The contribution for those project adds will come in the final quarter then.
Yes. All right.
So more or less, we said some EUR 5 million in the solar project so far, so -- little in wind, but then we have the [ cost ] against it. So it sums up the 2 big contributors for the first 9 months were the solar, module trade business and the IPP business.
And lastly, the equity. Very well seen. I hope I can get through it without commenting on this. But of course, if you look on the change statement of the equity in the reporting, you will see it very clearly, there is one effect in the OCI, which comes out from the energy trading business. And that comes along with a mismatch of this business -- I don't know if you're familiar -- maybe you saw it also with other companies from the IFRS 9 treatment of contract that we made. You know that we are trading through energy contracts, buying from one side, selling it immediately off to the other side. And it was very successful in '22, also contributing into 2023. But there is an effect on that, that goes into the OCI with some EUR 232 million downturn on equity in the 9 months statement. Finally, it will probably -- we are overlooking if we could change the treatment into year-end but nevertheless, the OCI change at the end of October is only EUR 65 million. So that will go down or will go out of the equity for the full year period, I guess. So -- but in the 9 months period, this effect has been accounted fully into the equity. It's cash neutral and it's result neutral, but it affects the equity.
And then you see all the other going ups and going downs. So we had an increase again from the pension accrual, from the interest rate increase. We have dividends payments against it. And of course, we had this wonderful 9-month result, net result, net profit coming in. So by chance, it mostly net off, as you said, and leads to an increase of EUR 50 million, but that's a snapshot only for September.
The next question comes from Heinz Müller from Dr. Kalliwoda Research.
Heinz Müller speaking, Kalliwoda Research. Yes. Unfortunately, there is only one left. So I'm wondering that the sales in the innovation segment are declining despite the fact that the new ag machinery, where you had an increase in revenues, is equipped with software. So perhaps you can give us an explanation of this trend.
Mr. Müller, if I may. This is not a decline in the investment in the farm sector or smart farming business. It has to do with that we took the e-commerce activities that we had -- included also in this segment into the operational segments now. So it's just a shift from that line into the operational lines above agriculture, building materials and energy. Nothing to do with lower investment on smart farming.
The next question comes from Anne Margaret Crow from Edison Group.
I'd just like to say, please don't complain about your politicians too much. You should try living in the U.K. right now. Yes, exactly.
So my question is on fertilizer prices. Because I was speaking with the Chief Executive of Origin Enterprises earlier this year, earlier in the summer. And he commented that at that point, fertilizer prices were so high that it was actually discouraging farmers from investing in fertilizer. They really weren't certain that they were going to get sufficient return from application. So my question, has that changed? Are you seeing a different situation where you are?
First of all, due to the higher earnings of the farmers, we do not see a downtrend in the fertilizer business at all. That's also the reason why we have this positive impact in our P&L statement. And you also see that the farmers are really significantly investing money in machinery in the machinery business. It has to do with their earnings. Their earnings are extremely high here in Germany. And you know we are the farmers over the last years, they did not have such a high profitability and they were not used to that.
And due to the fact that the earnings are good, the question for a farmer here is, because we are much more fragmented than, for instance, the business in the U.K., where you have the consolidation process behind you, so to say, the farmers are very skeptical regarding the political situation and the development on the political side. And this means always they are investing in assets. They are investing, so to say, a little bit in BayWa in buying machineries just to protect the money. Whether that's right or wrong, it's a different question.
And so far, we do not see really a downturn. And yesterday, we had a discussion with Ms. Wienert, our new Board member, and she was also towards the next year positive -- maybe not on the level we have at this point in time, but we are still very positive. And so far, and I really appreciate and see the colleagues in U.K. very, very, very positive. And I know they are really experts.
But I believe that we have a real different market situation in middle -- in the middle of Europe. And this is not only here in Germany. This case, it's also in Austria and some smaller Eastern European countries like Czech Republic and Serbia and so forth.
The next question comes from [ Bernd Lepping from Bernd Lepping ].
I'm very impressed of the management and of the company. But my question is, Andreas, I ask the question. The equity -- the EBIT, EUR 250 million and the equity only plus EUR 50 million. That was my question, but it is answered.
Okay. Thanks.
We will now take a follow-up question from Oliver Schwarz from Warburg Research.
Firstly, my beloved segment, Other. Mr. Helber was able to once again grow the segment in regards to its negative EBIT contribution. And it now totally eclipses the Building Materials segment EBIT contribution. So it's probably the third most important segment BayWa has in regards to EBIT development. I appreciate remarks on the dividend income, especially from your Austrian participations. So my first question would be the 2021 dividend of Raiffeisen Bank that was due payable in 2022, has that been scrapped by Raiffeisen Bank? Or has that been deferred to a later period in time?
Firstly, Mr. Schwarz, thank you for your positive comments on my performance. I really try my best here.
Herr Schwarz, I am going to call the Chairman of the Supervisory Board. I think we have increase the negative bonus for Andreas.
Okay. I have to pay back.
We reached the upper end of the guidance range, right?
Absolutely. Final destination, a decrease.
Yes. No, the dividend exactly -- in the COVID years, it was banned. In the first COVID year, I guess, the dividend has been banned or limited from the ECB regulation. That has been a different thing this year. But I think as far as I know, it has come through the Austrian -- the banking overlooking system. I don't know how they call it there, that they forced them because it has to do with the Eastern European business, partly also with the Russian business. That was the reason why that did not pay the dividend out. Maybe, and this is what we expect, that will be coming on a higher level next year as we saw it last year.
Understood. Can you point me or try to guide me at, let's say, run rate for that segment for the years to come? Because, obviously, there's a lot of moving parts in that. Some of them I have -- are one-off nature, like the dividend we just discussed. But when taking into account, let's say, a more normal development, if there are something like that, could you guide us on how the financial impact on the EBIT line is projected for the years to come?
Yes. I have a very clear view on this. And I know the run rate of the overhead costs and things that -- we always put into this Other segment also things where we make provisions. As I said before, in the real estate portfolio, for example, is completely included in there. It's not divided up to the operational entities. This is the way -- how we treat this whole portfolio. So I guess, EBIT in the range of EUR 70 million to EUR 75 million in the year-wise level, that would be a good one.
I'm not trying to increase it for my personal benefit.
Okay. Got that. And that includes the running IT projects, which could amount to EUR 30 million of costs over the next years -- is there a time frame attached to that EUR 30 million?
It comes through the next 3 to 4 years.
Okay, got that. And perhaps another comment on the tax rate, please, because obviously around about EUR 43 million of Q3 EBIT was by the divestment of, obviously -- of biogas activities and also of the greenhouse facilities. But still, the tax rate for the quarter is close to 30%. Or, let's put it that way, it's close to the level of Q1 and Q2, which didn't have this distortion, at least not to that amount, in the EBIT.
Absolutely right. For the quarterly revenues, we normally take the calculated average tax rate, which is 29.8% or something like that. And that's -- we only -- that would be a reducing effect when it comes through at the year-end when we have the proper tax calculation in. But on the quarterly result, it's only the, how do you call it, the standard tax rate.
Okay. Got it. And lastly, I'm still trying to get my head around your guidance for Q4, and you know that. But I'm doing my best to explain it to myself. I came up with another idea where some sunk costs might be found. Obviously, we all know that BayWa is heading for a major anniversary, 100 years of BayWa in 2023. I saw that you have a lead agency coordinating all the facilities for that event, Zeichen & Wunder. And I know that Zeichen & Wunder did also the 100 years of BMW Group festivities and that was -- let us put it that way, that was a very lavish thing to do. And that obviously did incur some costs. Have you already made provisions in 2022 for the costs you're expecting in connection with these festivities? Or are there any special bonuses, especially for management, obviously, earmarked for 2022 in that regard?
And maybe also, there's something called the employees. I don't know whether you are able or willing or both to talk about that already at this stage.
Mr. Schwarz, you're really well informed. What should I say? You got it more or less. But we don't have provisions for the spending to come for the 100-year celebration programs. It's not only one. And by the way, all of you, of course, are invited -- or you will be invited for the end of February for our [indiscernible] in Munich in the Isarphilharmonie, which is going to be really a great -- will be a great event. I tried to avoid the word party because it's not only a party. It's really an event with good politicians. The Prime Minister will come, maybe. The Federal President, depends a little bit whether he is available or not. But his speeches are so boring that I prefer just Mr. Söder, the Prime Minister of Bavaria and that is sufficient. We do not want to have the usual performance of people talking to us and speeches and so forth.
So that's -- it's going to be a great event, as I said, with superstars singing, making music and so forth. And so far, there are costs linked with, but it's not included here. And the other thing, I got some hints from Mr. [indiscernible] is, of course, we are discussing plans how can we give some benefits to the employees.
And mostly and hopefully, that we can do it this year because the result is very good, and this is already included in the forecast. But we are not going to make announcements here.
No, we can't do that because we need to negotiate that with workers council, with the union, and there is not yet an agreement. And you know we must be very careful what we are communicating here because what we want to contribute, so to say, to the employees is a tax-optimized payment.
The next question comes from a follow-up question from Knud Hinkel from Pareto Securities.
Hopefully, final question. So I would be interested to hear what you think about the interest environment. So interest rates have gone up sharply in the last couple of months. You have some debt on balance sheet. So maybe you can give us beyond a ballpark, your impression how interest costs will develop over the coming years maybe.
Yes, Mr. Hinkel, maybe I'll take this question. Of course, it increases. We are very happy that we closed the syn loan the year before that we are mostly with a large extent in long running financing structures, which reduces interest costs for the most near future. But we already made the sensitivity analysis over the interest development, which we see in worst case, base case and whatever it will be, the mostly realistic case. Interest rates are going up.
We expect an additional burden for '23 of around EUR 7 million to come if it's in a more base case scenario as we see it today. But I'm not worried that we can carry the additional interest rates [ by the interest coverage. ] Results are very good and also the potential for the next years are good. And as you know, the bank debt or the debt position that we have currently in. I mentioned it in the beginning, whereby the end of September, these are short-term running debts on financing, on inventory and receivables. So that's not the big long-standing impact on the interest results.
We will now take the next question from Norbert Kalliwoda from Dr. Kalliwoda Research.
I'm always interested in technology, and I'm impressed from your so-called NAÏO Dino chopping robot for maize. And it's nice because it's electrically powered and it's 10 hours fully autonomous, so without any driver. And I read that you treat 5 hectares per day and it's weight of one tonne with satellite navigation. So the question is, when is this finished, the R&D? I think this product is almost finished. And how do you see this market potential for this nice product?
Yes. Klaus Lutz here. Well, we are selling this for years already. So the R&D process in principle has been finished already and the market potential is more a niche market, so to say. Nevertheless, from a technology point of view, that's part of the future, the future technology of agriculture itself and what we see is more satellite and data-based evaluation process from -- for the farmers, which we are providing through the company VISTA GmbH to the farmers. And for that, we need also more optimized technology devices just to execute the results of the evaluation for the benefits of the farmer. Well, that's a very general remark now, but we are used to all that.
But the R&D process itself is not part of our business model. That's made by the manufacturers, by Fendt, EKO, CLAAS and all these companies. Insofar -- we are part of it, of course. It's important to have the skilled profile of the service people, the project managers on the highest possible level. It's also why education and HR development is extremely important only just from a technical point of view, of course, and product point of view. And we are investing a lot of money there. So -- but that's part of our normal business.
Okay. Are there any questions left or no?
There are no further questions on the phone.
Okay. Then we are at the end of our conference call. To say in agri terms, thanks for that fruit, for this conference. The next conference will take place on the 30th of March. But as we have heard, you will see us before at a great event here in Munich in February. Until then, I wish you all the best. Thank you very much. Bye-bye.
That will conclude today's conference.