Consolidated revenue of AB Akola Group and its controlled companies (the Group) for the six months of the financial year 2023/2024 exceeded EUR 758 million and was 33% lower compared to the corresponding period of the previous year.
The Group sold 1,468 thousand tons of various products, or 27% less than in the same period last year.
Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the six months exceeded EUR 37 million, 49% lower than the previous year. Net profit fell by 71% to EUR 13 million.
| 2022/2023 6 months | 2023/2024 6 months | 2023/2024 compared with 2022/2023, % | |
| Total trading volume, tons | 2,005,684 | 1,468,012 | (27) |
| Revenue, thousand EUR | 1,133,926 | 758,466 | (33) |
| Gross profit, thousand EUR | 107,349 | 76,703 | (28) |
| EBITDA, thousand EUR | 73,661 | 37,462 | (49) |
| Operating profit, thousand EUR | 59,666 | 23,772 | (60) |
| Net profit, thousand EUR | 44,701 | 13,026 | (71) |
The consolidated revenue of AB Akola Group for the second quarter of the 2023/2024 financial year amounted to EUR 338 million and was 38% lower than in the previous year (EUR 544 million). The gross profit for Q2 decreased from EUR 51 million to EUR 28 million, and the operating profit from EUR 21 million to EUR 2 million. The net loss amounted to EUR 2 million, compared to a net profit of EUR 17 million in the corresponding period last year.
"After a fairly successful first quarter, sales have slowed, especially for grain. The Group's revenue and profit contraction was mainly due to lower market prices and a 46% drop in grain sales volumes. The farmer-serving business was affected by the low grain and milk prices, with sales of plant care products and micronutrients also underperforming as farmers were more frugal and invested less in their future crops. Poor harvests in Latvia and Estonia have put farmers in an even tighter financial situation than in Lithuania, which has been reflected in the performance of our companies in those countries. The trade in certified seeds, raw materials and feed additives was notable among the growing activities. The food production business is also growing steadily and profitably," said Mažvydas Šileika, CFO of AB Akola Group.
After the merger of the two business segments in the new segment ‘Partners for farmers’ in the financial year 2023/2024, the segment’s revenue went over EUR 574 million and accounted for 76% of the total income of the Group in H1. The segment's gross profit was EUR 47.8 million, and the operating profit was EUR 16.5 million.
"This year's cereal harvest is harder to market than usual. Although our own elevators were operating at maximum capacity and handled 16% more grain than in the previous year, the total volume of grain sourced and sold was lower due to a poorer harvest in Latvia, a saturated market, and our own tactical decisions. In the last months of the reporting period, the market declined. In addition to the weak overall demand on the world grain market, the war in Ukraine continued to weigh on the grain trade, both in terms of aggressive Russian grain exports and the restriction of crop exports from Ukraine by Poland. At the end of December, we had sold about half of the grain we had sourced, 655,000 tons, with almost 590,000 tons in stock. Raw materials and additives for feed were sold at almost 283 thousand tons or 23% more. We sold 14% less feed and premixtures than last year," said M. Šileika.
The Group's revenue from certified seeds, fertilizers, and plant care products fell by 24% to EUR 122 million. Revenue from agricultural machinery and equipment sales, rental, and services fell by 10% to EUR 50 million.
"The contraction in the supply of goods to farmers was significantly influenced by the reduction in winter crop acreage and weather conditions unfavorable for the use of products. Farmers who held back their sales due to low grain prices felt uncertain about the future and opted for minimalist agro-technological solutions in autumn. Increased competition also reduced the profitability of these activities. And although we expect a recovery in the spring, we cannot expect a reduction in competition," said M. Šileika.
The ‘Food Production’ segment's revenue, which accounts for 26% of the Group's total revenue, decreased to EUR 198 million. The gross profit of this activity was EUR 28.4 million.
"The poultry business recovers for the third consecutive quarter, with improvements in operational efficiency, product quality, and profitability. While poultry business revenue declined by 4%, gross profit grew by 41% to over EUR 15.8 million. Sales of flour, flour mixes, and breadcrumbs were 11% lower than the previous year, as more products were consumed internally to produce other products, which led to an 8% decrease in sales revenue to EUR 13 million. At the same time, gross profit from these activities was EUR 2.3 million. Sales of instant foods and ready-to-eat products fell by 29% to 120 million units due to high stocks in customers' warehouses, but sales revenue remained stable at over EUR 42 million, and gross profit increased by 90% to EUR 7.6 million. Grybai LT, a ready-to-eat plant acquired in July 2023, produced 3 million units of products in five months, 75% of which were exported. The operating profit for the whole food segment grew by 3% year-on-year to EUR 10.4 million, reflecting good prospects for this segment," said M. Šileika.
The ‘Farming’ segment with the revenue of EUR 25 million accounted for 3% of the Group's revenue. The gross loss from this activity was EUR 1.6 million, and the operating loss was EUR 3.1 million.
‘Loss is decreasing compared to Q1, but still, the results of farming companies are strongly influenced by global trends, with crop production having to be sold at prices 30-35% lower than last year. Although we sold 29% more crop production than at the same time last year, income from crop production fell by almost 9%, and the activity generated a loss of EUR 0.7 million due to increased operating costs, as the cost of producing the 2023 crop was 20-25% higher than in 2022. We sold almost 4% more milk than at the same time last year, but milk sales revenue shrank by almost 23%, and milk production was loss-making. While milk farm gate prices have been falling since autumn 2022, the cost of milk production is falling at a slower pace. There is good news - winter crops are overwintering and looking good," M. Šileika described the situation in the agricultural companies.
The ‘Other Products and Services’ segment that accounted for 1% of the Group’s revenue grew by 1% year-on-year to over EUR 10 million. The gross profit from this business was EUR 2.0 million, and the operating profit was EUR 0.05 million.
"It is difficult to compare the segment's results with previous periods when the results included various activities from other segments. However, as we have narrowed the segment’s activities down to the three main ones, we can see that both the scale of operations and profitability are increasing. All the activities in this segment have improved their results, with an 11% increase in veterinary pharmaceuticals, a 32% increase in revenue from pest control and hygiene products, and a 41% increase in revenue from extruded products, the major part of which is pet food. Focusing on premium products, we are producing and selling lower quantities of it, thus increasing the profitability of this activity, and this is already showing in the results, with the segment's gross profit up 24%," said M. Šileika.
About AB Akola Group
AB Akola Group (formerly AB Linas Agro Group), which changed its name in December, operates the largest agricultural and food production group in the Baltics, with 4.9 thousand employees and annual revenue of EUR 2 billion. The Group operates along the entire food production chain from field to fork, producing, preparing, and marketing agricultural and food products, and providing goods and services to farmers. The Group's financial year starts on 1 July. Last July, the Group acquired a ready-to-eat food production plant in Širvintos (Lithuania).
Attached:
Consolidated Unaudited Financial statements and Consolidated Interim Report of AB Akola Group for the six-month period ended 31 December 2023
More information:
AB Akola Group Chief Financial Officer Mažvydas Šileika
Mob. +370 619 19 403
E-mail m.sileika@akolagroup.lt
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