The consolidated turnover for the three months of the 2024/2025 financial year of the AB Akola Group and its controlled companies (the Group) exceeded 384 million euros and was 9% lower than that of 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 quarter amounted to €27 million, down 17% compared to the previous year. Net profit decreased by 27% to 13 million euros.

“The decrease in sales volumes was mainly due to a contraction in sales of rapeseed, corn, vegetable oil and certain other raw materials intended for animal feed. All but one operating segment recorded a decline in revenue. The largest operating sector, ‘Partners for Farmers’ experienced the largest contraction of 14.6%. Only the “Food Production” segment saw an increase of 7%. Even with declining revenues, all businesses except agriculture were profitable, and the food sector was more profitable than agribusinesses. “, said Mažvydas Šileika, CFO of Akola Group.

The “Partners for Farmers” segment generated a turnover of more than €283 million and represented 74% of the Group’s total turnover for the period considered. The gross margin of the segment amounted to 22.5 million euros and the operating profit to 8.8 million euros.

“Preliminary data shows that the 2024 grain harvest in the Baltics will be 12 million tonnes, 5% more than in 2023, including 7.2 million tonnes in Lithuania, our main grain supply market . During the reporting period, we purchased 3% less grain and rapeseed than last year, including 7% less grain processed by our grain elevators than the previous year. Most purchases were of second-grade wheat, with transaction prices for higher-grade grains fluctuating 20 percent from last year. Throughout the reporting period, without clear direction, we remained in the lower price range. We sold 313,000 tonnes of grains and oilseeds, 13% less than the previous year, with revenues contracting 28% and gross margin falling 88%. With the promise of a better global grain and oilseed harvest, price pressures are likely to continue,” Mr Šileika said.

Raw materials and food additives were sold down 11%, or 120,000 tonnes. Compound feeds and premixes increased by almost 2% compared to last year, with production lines operating at full capacity. Sales of these products increased by almost 13% compared to the previous year, but the total turnover of animal feed, feed raw materials and premixes fell by 9% due to market pressure on prices. The gross profit of the animal feed sector was reduced by 14% due to bottlenecks in the logistics of shipments from Ukraine.

The Group’s turnover from certified seeds, fertilizers and plant protection products decreased by 2% to €85 million.

“We sold 8.5% more fertilizers, 88% more plant protection products and micronutrients and the same volume of seeds as the same period last year. However, prices were lower than last year due to the still unimproved situation of farmers, so that the total revenues of these product categories decreased by 2% and the gross profit by almost 9 %,” said Mr. Šileika.

The agricultural machinery and equipment market continued to contract due to low producer prices and rising borrowing costs. The Group’s turnover from the sale, rental and various maintenance of agricultural and agricultural machinery and equipment amounted to 23 million euros, down 17%, while the gross margin of these activities decreased by 19% to 4 million euros.

“We are seeing a trend in the market towards cost savings. This is not only due to the elimination of planned machine purchases, but also the reduction of planned machine inspections. EU support programs are encouraging for us and for farmers, but their impact is only felt in the second half of the financial year. In an environment where farmers no longer have the means to buy machines, our economic model is also experiencing. a significant change, with rental income doubling compared to a year ago Due to the intense competition in the machine rental industry, we have expanded our range of services to include less frequent services. farms that will not meet EU aid criteria and it is increasingly difficult for farms to find qualified machine operators as young people no longer want to work in this field,” said Mr. Šileika about current trends in the agricultural sector.

The turnover of the “Food Production” segment, which represents 28% of the Group’s total turnover, exceeded 107 million euros. The gross profit of this activity amounts to almost 21 million euros and the operating profit to almost 11 million euros.

“We always believed this would happen, and it is happening: profitability growth in the food segment has become a trend, growing for the third year in a row. Sales of poultry and poultry products increased by 11%. , revenues from poultry activities by 10% and the gross margin of this activity increased by 58%. Sales of flour, baking mixes and breadcrumbs to external customers decreased by 11%, while the figure fell. business of 18% did not affect the gross margin of this activity, which increased by 1.6%. It should be noted that the production of flours and pastry preparations remained stable, while the production of. breadcrumbs increased by 25%, but about 24% of this is used to produce intra-group chicken products -Food products also increased by 11%, with an increase in turnover. of 5% and an increase of 4% of gross profit. Start-up and testing of a new instant noodle factory in Alytus is underway and reaching full capacity is planned for 2025. Since the new breadcrumb factory will also be operational in the spring, we will only have a complete picture of the growth of the food sector only in the next financial year,” said Mr. Šileika.

The turnover of the “Agriculture” segment, representing 3% of the Group’s total turnover, amounts to 11 million euros. The gross loss from this activity amounts to 0.1 million euros and the operating loss to 1.5 million euros.

“At the end of the reporting period, our agricultural enterprises had harvested most of the crop – 87 thousand tons, down 4% from last year, as a dry summer damaged the bean and rice crops. pea Milk production was 9.8 thousand tons, or 2% more. Income from agricultural crops decreased by 11% due to the fall in market prices by 10-15%, while income from. milk production increased by 13% We sold 70% of the new crop, but agricultural crops recorded losses, as is often the case in the first quarter of the year, thanks to the depreciation of the cost of inventory sold in accordance with. the Group’s accounting policy, milk production generated a gross profit of 124% higher than that of the same period last year, or 0.7 million euros. Milk prices were encouraging, up 10. % compared to the same period last year,” said Mr. Šileika.

The “Other products and services” segment represents 1% of the Group’s turnover and amounts to 5 million euros. The gross profit of this activity amounts to 0.96 million euros and the operating profit to 0.57 million euros.

“We sold 29% less pet food than last year, as much as we produced – the goods are not stored in warehouses. The production unit operated almost at full capacity and new products have been developed to reduce the production of economy category, which currently accounts for around 45% of the total. As we focus on high-end products, production volumes are decreasing due to production technology (8. %), but the average basket price increases by 19%, reducing the gross margin, but the gross operating margin fell very slightly over one year (from 19% to 17%) and the prospects for this activity are attractive.

Veterinary pharmaceuticals revenue increased 10%, mainly driven by the growing small animal segment, while pest control and hygiene product revenue increased 25% driven by good one-off transactions,” said Mr. Šileika, about the more minor but promising segment.

The AB Akola Group owns the largest agricultural and food production group in the Baltics, employing more than 5,000 people. The group operates throughout the food production chain, from field to fork, by producing, preparing and marketing agricultural and food products, as well as providing goods and services to farmers. The Group’s financial year begins on July 1.

More information:

Mažvydas Šileika, CFO of AB Akola Group
Crowd. +370 619 19 403
Email [email protected]

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  Unaudited consolidated financial statements and consolidated management report of the AB Akola Group for the quarter ended September 30, 2024