AGRANA acquits itself well in difficult 2007|08 financial yearAd-Hoc Date: 21.05.2008
In the completed 2007|08 financial year the AGRANA Group sustained its growth trajectory in the Starch and Fruit segments despite difficult conditions in raw material procurement. Developments in the Sugar segment were defined by the consolidation of the sugar market in the course of the EU sugar regime reform. In the twelve months to 29 February 2007|08, based on final data, AGRANA recorded revenue of € 1,892.3 million, which as expected was slightly off the prior-year level of € 1,915.8 million. The key reason was the absence of the additional two months of revenue that had been included in the Fruit segment’s prior-year results to align the segment’s year end with that of the AGRANA Group. Based on a twelve-month comparison that eliminates this effect, Group revenue grew by 6%.
Thanks to the good performance in the Starch and Fruit segments, Group operating profit before exceptional items rose from € 107.0 million to € 111.4 million, or by 4%. As a result of € 9.9 million in restructuring costs and other exceptional items in all segments, however, operating profit after exceptional items eased from the prior year’s € 105.8 million to € 101.5 million.
“Despite difficult fundamentals such as the global commodity boom and speculation in agricultural commodities, combined with the reform of the EU sugar regime, we acquitted ourselves well,” notes AGRANA CEO Johann Marihart in connection with the presentation of the 2007|08 financial results. “Our strategy of diversification through the three pillars of Sugar, Starch and Fruit, coupled with our strong global expansion especially in the last few years, has definitely proven itself in this very challenging market environment.”
At the Annual General Meeting on 4 July 2008 the Management Board will thus propose paying an unchanged dividend of € 1.95 per share for the 2007|08 financial year.
|Operating profit before exceptional items||€m||111.4||107.0|
|Operating profit after exceptional items||€m||101.5||105.8|
|Profit before tax||€m||73.1||93.5|
Profit for the period
|Earnings per share||€||4.53||4.85|
|Purchases of property, plant and equipment and intangibles*||m€||207.7||157.4|
* Excluding goodwill
External revenue by business segment was as follows:
|Fruit segment (2006|07 incl. 14 months)||€m||
|AGRANA Group revenue||€m||1,892.3||1,915.8|
Results for 2007|08 financial year
Group operating profit improved before net negative exceptional items of € 9.9 million. Thus, one plant was closed in the Fruit and one in the Sugar segment in further streamlining measures. As well, the delay in full commissioning of the bioethanol plant in Pischelsdorf as a result of the run-up in commodity prices led to one-off expenses.
Net financial items amounted to a deficit of € 28.4 million (prior year: deficit of €12.3 million), reflecting the brisk investment activity and the financing of the working capital as a result of the increase in raw material costs. The resulting profit before tax was € 73.1 million (prior year: € 93.5 million) and after-tax profit before minority interests reached € 63.8 million (prior year: € 71.1 million). Profit for the period attributable to AGRANA’s shareholders was € 64.3 million, compared with € 68.9 million in the year before. Earnings per share were € 4.53 (prior year: € 4.85).
Ensuring growth through investment – Sustained high equity ratio
The Group’s capital expenditures in 2007|08 reached € 207.7 million (prior year: € 157.4 million), with the increase of € 50.3 million or 32% helping to drive AGRANA’s growth. This was also expressed in the increase of € 108.3 million in property, plant and equipment to € 653.3 million. Total equity improved by 3% from the prior year’s € 895.5 million to € 922.1 million, bringing the equity ratio to 42%. While non-current borrowings fell visibly by € 24.4 million from € 331.7 million to € 307.3 million, current borrowings rose from € 194.4 million to € 370.1 million as a result of inventory growth and higher commodity costs.
“Although the Starch segment received most of the capital investment in 2007|08, particularly for the completion of the bioethanol plant in Pischelsdorf, we also set the stage for sustained growth in the Fruit segment through important capital projects,” says CFO Walter Grausam. ”With an equity ratio of 42% despite the recent surge in our investment spending, we are very well positioned to keep growing in the years ahead both through capacity expansion and acquisitions.”
External revenue saw a slight decrease of 4% in the 2007|08 financial year to € 751.7 million (prior year: € 784.7 million), as the EU quota reduction left sales volumes flat or declining. Nevertheless, the segment’s operating profit before exceptionals was held steady year-on-year at € 32.6 million through a wide range of measures, including energy efficiency improvements and concentration of business locations. The Sugar segment accounted for about 40% of Group revenue.
The Starch segment, with double-digit growth in revenue and earnings, was an important driver of AGRANA’s business performance in 2007|08. Thanks to higher sales quantities and price increases, external revenue was pushed up by 33% to € 288.1 million (prior year: € 216.5) million. Despite the rise in raw material costs, operating profit before exceptional items grew to € 35.3 million (prior year: € 28.5 million). The non-capitalisable expenses for the bioethanol plant in Pischelsdorf detracted by € 6.8 million from 2007|08 operating profit after exceptional items. Overall, the Starch segment’s share of Group revenue was approximately 15%.
In 2007|08 AGRANA further expanded its position as the world’s leading manufacturer of fruit preparations for the dairy, bakery and ice-cream industry. The Group also cemented its market position as the largest producer of apple and berry juice concentrates in Europe. External revenue, at € 852.5 million (prior year with 14 months: € 914.6 million), was below the year-earlier level owing to the absence of the additional two months related to the prior-year alignment of the financial year end. The same was true of the pre-exceptionals operating profit of € 43.5 million (prior year: € 45.6 million). Based on a twelve-month comparison revenue and operating profit before exceptionals increased. Operating margin before exceptional items was 5.1%. Restructuring expenses of about € 4.6 million were recorded for, among other things, the planned closure of the fruit preparations plant in Kaplice in the Czech Republic. With a share of about 45% of Group revenue, Fruit is AGRANA’s highest-revenue segment. Of the three Group segments, Fruit also generates the largest share of profit.
For the 2008|09 financial year, AGRANA expects further growth in revenue to more than € 2 billion. Especially further organic growth in the Starch segment is to figure prominently in this sales expansion.
In the Sugar segment, the new EU sugar regime is expected to significantly stabilise the market. By defending the leading market position in Central Europe and through further optimisation activities, AGRANA plans to safeguard the profitability of the sugar business. However, the reform of the EU sugar regime will continue to shape the segment’s business performance in the coming year.
The Starch segment maintains its consistent strategic focus on specialty products. The expansion of processing capacity in Hungary and the launch of bioethanol production in Austria are expected to generate significant additional revenue growth.
In the Fruit segment, AGRANA will sustain the growth trend both in fruit preparations and fruit juice concentrates, particularly as the market offers superior growth opportunities in both businesses. In the new 2008|09 financial year this will be accomplished mainly by expanding existing capacity.