Consolidated revenue of AB Akola Group and its controlled companies (the Group) for the nine months of the financial year 2023/2024 exceeded EUR 1,124 million and was 25% lower compared to the corresponding period of the previous year.
The Group sold 2,363 thousand tons of various products, or 12% less than in the same period last year.
Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the nine months amounted to EUR 46 million, down 25% year-on-year. Net profit decreased by 63% to EUR 9 million.
| 2022/2023 9 months | 2023/2024 9 months | 2023/2024 compared with 2022/2023, % | |
| Total trading volume, tons | 2,687,031 | 2,362,766 | (12) |
| Revenue, thousand EUR | 1,500,359 | 1,124,439 | (25) |
| Gross profit, thousand EUR | 113,119 | 103,720 | (8) |
| EBITDA, thousand EUR | 61,202 | 45,724 | (25) |
| Operating profit, thousand EUR | 40,464 | 25,003 | (38) |
| Net profit, thousand EUR | 24,895 | 9,148 | (63) |
The consolidated revenue of the AB Akola Group for the third quarter of the 2023/2024 financial year remained stable year-on-year at EUR 366 million. Gross profit for the third quarter increased from EUR 6 million to EUR 27 million, and operating profit was EUR 1 million, compared to an operating loss of EUR 19 million last year. The net loss was EUR 4 million, compared to a net loss of EUR 20 million in the corresponding period last year.
"All operating segments generated lower revenue than at the same time last year, but within the segments, there were both more and less successful activities. Among the most significant growth activities were trading certified seeds, fertilizers, some feedstuff, pet food, and veterinary pharmaceuticals. Our grain elevators have also grown. The most difficult situation was in agricultural activities, with both crop and dairy farming making losses. With low grain and milk farmgate prices, farmers postponed investments in new machinery. Still, this increased demand for machinery rental services, and sales revenue from these activities grew by more than 150%," said Mažvydas Šileika, CFO of AB Akola Group.
In the financial year 2023/2024, the merger of the two business segments into a new segment, Partners for Farmers, resulted in revenue of EUR 847 million, accounting for 75% of the Group's total revenue. The segment's gross profit was EUR 64 million, and operating profit was EUR 19 million.
"We sold 1,155 thousand tons of grain and oilseeds, 24% less than the same time last year. The global market has been in high supply throughout the period under review, with strong competition between exporters, which has led to further downward pressure on the price of grain due to Russia's dumping of grain, as it has increased its export quotas and lowered the minimum price of wheat for export. According to the EC, in 2023 alone, 4.8 million tons of cereals were imported into the EU from Russia and Belarus. Raw feed materials and additives were up 20% or almost 433 thousand tons. Still, trade in these products was complicated and loss-making as exports from Ukraine were not smooth, with shipments disrupted by import and transit restrictions imposed by Poland on feedstuff from Ukraine and protests by Polish farmers, which prevented the Group's companies from delivering on time to their customers and resulted in losses. The feed business did well: having increased production capacity a year ago, we produced 33% more compound feed and premixes, with sales up 3%. However, if we formally compare with the previous year, sales were down 5%, as last year's accounts still included two subsidiaries in Russia and Belarus that were on selling procedure," said M. Šileika.
The Group's revenue from certified seeds, fertilizers, and plant protection products fell by 25% to EUR 165 million.
Revenue from the sale, rental, and servicing of agricultural machinery and equipment contracted by 16% to EUR 57 million.
"The seed production factory in Dotnuva worked at total capacity, as it is every spring, with more certified seeds produced than at the same time last financial year. In preparation for the start-up of the new seed factory in Latvia, we carried out seed multiplication trials in Latvia and Estonia. Although seed market prices have fallen slightly this year, the gross profitability of the seed trade has been above the 5-year average, making seed production and trade one of the most promising activities for expansion.
Although fertilizer trading volumes were 15% above the previous year, prices were much lower than last year, resulting in a 36% drop in revenue for the business.
“The low grain prices made even cheaper fertilizers difficult to afford for farmers, so there was enormous competition between traders, some of whom also traded Russian and Belarusian fertilizers. Our business ethics do not allow us to do this, so it was very difficult to compete, but we managed to secure growth in profitability, with gross profit from fertilizer sales increasing by 207%," said Šileika.
Trade in plant protection products and micronutrients fell by 12.5%. Due to low grain prices, lower crop areas in Lithuania, damage to winter rapeseed crops in Latvia, and losses in Estonian winter crops, trade was conducted at historically low gross profit margins.
"The agricultural machinery and equipment sector was the most affected by the farmers' sentiment and generated lower sales revenue. Our market share in the western tractor and harvester markets in Lithuania increased, but in Latvia and Estonia, our position shrank. Revenue from this business was down 16%, but it is pleasing to see that the gross profit margin was above the historical average," said M. Šileika.
The Food Production Segment's revenue, representing 26% of the Group's total revenue, decreased by 4% to EUR 297 million. Gross profit from this business grew by 118% to EUR 40.5 million.
"Poultry companies performed similarly to the previous year, with sales volumes in tons stable and a slight contraction in revenue (3%). Profitability was higher than the previous year, with a 46% increase in gross profit from poultry farming operations. Bird health, animal welfare, and overall housing indicators remained good. The result of the team's efforts is very pleasing, as the whole reporting period was not easy for some of the companies - throughout the reporting period, there were complex processes of merging four Latvian poultry meat producers into one company, which was completed in February with the merger of the companies into AS Kekava Foods," said M.Šileika.
Sales of flour, baking mixes, and breadcrumbs were 7% lower than last year, as larger quantities were used in the production of other products. Revenue from the sale of these products fell by 11%, while gross profit from these activities grew by 3.6%.
Sales of instant foods and ready-to-eat products fell by 5%, while revenue from this activity also contracted by 4%, but gross profit grew by 17%.
"Sales of instant noodles and porridges have slightly contracted due to both seasonality and the decline in the market price. The factory in Širvintos ‘Grybai LT’ is also undergoing changes and is still operating at partial capacity. However, profitability is stable and solid, and we expect higher demand for our products in the fourth quarter of the financial year," said M. Šileika.
Revenue from the Farming Segment, which accounts for 3% of the Group's total revenue, amounted to EUR 37 million and was 15% lower than last year. The gross loss from this business was EUR 4 million, and the operating loss was EUR 7 million.
"This year, the efforts of agricultural companies to work efficiently have not yielded good financial results. Although the volume of milk sold increased by 3% during the reporting period, and we maintained the quality of the milk, the steady fall in farmgate prices over the last year and a half has reduced milk production income by 14%. We sold 26% more crop production than at the same time last year, but revenue from this activity also shrank by 15% due to low grain market prices - they were 30-35% lower than last year. A write-down of the cost of inventories of EUR 7.4 million and the write-down of the fair value of biological assets contributed to the overall loss. Only the state of the crops for the new harvest is optimistic - so far it is perfect," said M. Šileika, describing the situation in the own agricultural companies.
The Other Products and Services Segment accounted for 1% of the Group's revenue and remained stable year-on-year at almost EUR 15 million. The gross profit from this activity was EUR 3 million, and operating profit was EUR 0.4 million.
"Veterinary pharmaceuticals sales revenue grew by almost 19% compared to the same period last year, revenue from extruded products, mainly pet food, grew by 24%, and revenue from pest control and hygiene products grew by 52%. All of these are promising and have a growing trend, and their profitability is also growing," said Šileika.
AB Akola Group (formerly AB Linas Agro Group) operates the largest agricultural and food production group in the Baltics, employing 4.9 thousand people. The group operates along the entire food production chain from farm to fork, producing, preparing, and marketing agricultural and food products, and providing goods and services to farmers. The Group's financial year begins on 1 July. Last July, the Group acquired a ready-to-eat food production plant in Širvintos.
Attached:
Consolidated Unaudited Financial statements and Consolidated Interim Report of AB Akola Group for the nine-month period ended 31 March 2024
More information:
AB Akola group CFO Mažvydas Šileika
Mob. +370 619 19 403
E-mail: m.sileika@akolagroup.lt
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