Three months of AB Akola Group: the food sector outperformed
agri-related businesses
The consolidated revenue for the three months of
the financial year 2024/2025 of AB Akola Group and its controlled
companies (the Group) exceeded EUR 384 million and were 9% lower
than in the corresponding period of the previous year.
The Group sold 729 thousand tons of various
products, a decrease of 5% compared to the same period last
year.
Consolidated earnings before interest, taxes,
depreciation and amortization (EBITDA) for the three months
amounted to EUR 27 million, 17% lower than in the previous year.
Net profit decreased by 27% to EUR 13 million.
|
2023/2024
3 months |
2024/2025
3 months |
2024/2025
compared with
2023/2024, % |
Total trading volume, tons |
765,179 |
729,277 |
(5) |
Revenue, thousand EUR |
420,726 |
384,091 |
(9) |
Gross profit, thousand EUR |
51,147 |
44,095 |
(14) |
EBITDA, thousand EUR |
32,501 |
27,009 |
(17) |
Operating profit, thousand EUR |
24,803 |
18,824 |
(24) |
Net profit, thousand EUR |
17,510 |
12,743 |
(27) |
"The decrease in sales volumes was mainly due to a contraction in
sales of rapeseed, maize, vegetable oil, and some other raw
materials for animal feed. All but one of the operating segments
recorded lower revenues. The largest operating segment, ‘Partners
for Farmers’, saw the biggest contraction of 14.6%. Only the ‘Food
Production’ segment saw an increase of 7%. Even with shrinking
revenues, all businesses except farming were profitable, and the
food sector was more profitable than the agri-related businesses,"
said Mažvydas Šileika, Chief Financial Officer of Akola Group.
The ‘Partners for Farmers’ segment generated
revenue of more than EUR 283 million and accounted for 74% of the
Group's total revenue for the reporting period. The segment's gross
profit was EUR 22.5 million, and operating profit was EUR 8.8
million.
"Preliminary data show that the 2024 cereal
harvest in the Baltics will be 12 million tons, 5% higher than in
2023, including 7.2 million tons in Lithuania, our primary grain
sourcing market. During the reporting period, we bought 3% less
grain and rapeseed than last year, including 7% less grain handled
by our grain elevators than previous year. Most purchases were of
second-class wheat, with very little extra-quality wheat. Grain
transaction prices were 20% lower than last year. Wheat prices
fluctuated throughout the reporting period with no clear direction
but stayed within the lower price range. We sold 313 thousand tons
of grains and oilseeds, 13% less than the previous year, with a 28%
contraction in revenue and an 88% drop in gross profit. With the
promise of a better global harvest for cereals and oilseeds, price
pressures are likely to continue," said M. Šileika.
Raw materials and feed additives were sold 11%
less, or 120 thousand tons. Compound feed and premixes were almost
2% higher than last year, with production lines running at full
capacity. Sales of these products increased by nearly 13% compared
to the previous year, but total sales revenues of feed, feed
materials, and premixes fell by 9% due to market pressure on
prices. The gross profit of the feed business was reduced by 14% by
bottlenecks in the logistics of shipments from Ukraine.
The Group's revenue from certified seeds,
fertilizers, and plant protection products fell by 2% to EUR 85
million.
"We sold 8.5% more fertilizers, 88% more plant
protection products and micronutrients, and the same volume of
seeds as the same time last year. However, prices were lower than
last year due to the still unimproved situation of farmers, so the
total revenue of these product categories shrank by 2% and the
gross profit by almost 9%," said M. Šileika.
The agricultural machinery and equipment market
continued to shrink due to low farm-gate prices and increased
borrowing costs. The Group's revenue from sales, rentals, and
various servicing of agricultural and farm machinery and equipment
amounted to EUR 23 million, a contraction of 17%, while gross
profit from these activities decreased by 19% to EUR 4 million.
"We see a trend in the market towards cost
savings. This is not only in eliminating planned machinery
purchases but also in reducing planned machinery inspections. The
EU support programs are encouraging for us and farmers, but their
impact is only felt in the second half of the financial year. In an
environment where farmers can no longer afford to buy machinery,
our business model is also undergoing a significant change, with
rental income doubling compared to a year ago. Due to the intense
competition in the machinery rental sector, we have expanded our
range of services to include less frequent services. We believe in
the prospect of this, as there will always be farms that do not
meet the criteria for EU support, and it is becoming increasingly
difficult for farms to find qualified machinery operators, as young
people are no longer willing to work in this field," said
M. Šileika about current trends in the agricultural sector.
The ‘Food Production’ segment's revenue, which
accounted for 28% of the Group's total revenue, exceeded EUR 107
million. The gross profit of this business was almost EUR 21
million, and the operating profit was almost EUR 11 million.
"We always believed it would happen, and it is
happening - profitability growth in the food segment is becoming a
trend, growing for the third consecutive year. Poultry and poultry
product sales grew by 11%, poultry business income by 10%, and the
gross profit from this activity increased by 58%. The sales of
flour, baking mixes, and breadcrumbs to external customers
decreased by 11%, while the 18% decrease in revenue did not affect
the gross profit of this activity, which increased by 1.6%. It is
worth noting that the production of flour and baking mixes remained
stable, while the production of breadcrumbs grew by 25%, but around
24% of it is used to produce intra-group chicken products. Sales of
instant foods and ready-to-eat products also increased by 11%, with
a 5% increase in revenue and a 4% increase in gross profit. The
start-up and testing of a new instant noodles plant in Alytus are
underway. Total capacity reach is expected in 2025. As the new
breadcrumbs plant will also be operational in the spring, we will
only see the complete picture of growth in the food segment in the
next financial year," said M. Šileika.
The ‘Farming’ segment's revenue, representing 3%
of the Group's total revenue, was EUR 11 million. The gross loss
from this activity was EUR 0.1 million, and the operating loss was
EUR 1.5 million.
"At the end of the reporting period, our farming
companies had harvested the bulk of the crop – 87 thousand tons,
down 4% on last year, as a dry summer damaged the bean and pea
harvests. Milk production was 9.8 thousand tons or 2% higher. Crop
farming revenue contracted by 11% due to 10-15% lower market
prices, while milk production revenue grew by 13%. We sold 70% of
the new crop, but crop farming made a loss, as is often the case in
the first quarter of the year, due to the write-down of the cost of
inventories sold in line with the Group's accounting policy. Milk
production generated a gross profit 124% higher than at the same
time last year, or EUR 0.7 million. Milk prices were encouraging,
up 10% compared to the same period last year," said M. Šileika.
The ‘Other Products and Services’ segment
accounted for 1% of the Group's revenue and amounted to EUR 5
million. The gross profit from this activity was EUR 0.96 million,
and the operating profit was EUR 0.57 million.
" We sold 29% less pet food than last year, as
much as produced - the goods are not stocked in warehouses. The
production unit has been working almost at total capacity, and new
products have been developed to reduce the production of the
economy category, which currently accounts for around 45% of the
total. As we are focusing on premium products, production volumes
are shrinking due to the technology of production (8%), but the
average basket price is increasing. Revenue from pet food shrank by
19%, reducing gross profit, but gross operating margin declined
very slightly year-on-year (from 19% to 17%), and the outlook for
this business is attractive.
Veterinary pharmaceuticals sales revenue grew by
10% mainly due to the growing small animal segment, while pest
control and hygiene product sales revenue grew by 25% due to good
one-off transactions," said M. Šileika, about the most minor but
promising segment.
AB Akola Group owns the largest agricultural and
food production group in the Baltics, employing over 5 thousand
people. The group operates along the entire food production chain
from field to fork, producing, preparing and marketing agricultural
and food products, as well as providing goods and services to
farmers. The Group's financial year begins on 1 July.
More information:
AB Akola Group CFO Mažvydas Šileika
Mob. +370 619 19 403
E-mail m.sileika@akolagroup.lt
- Consolidated unaudited financial statements and Consolidated
management report of AB Akola Group for the three-month period
ended 30 September 2024
Akola Group Ab (LSE:0NSG)
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Akola Group Ab (LSE:0NSG)
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