AGRANA closes the 2002/03 financial year with revenues and earnings growthDate: 23.05.2003
- Consolidated revenues increase by 4 per cent to €mn 875.7
- Profit from operating activities increases by 6 per cent to €mn 80.5
- Consolidated earnings for the year increase by 48 per cent to €mn 65.4
In the words of CEO Johann Marihart at today’s press conference to present the group’s results in Vienna: “Now that EU enlargement has been decided, AGRANA’s strategy has finally become reality, and our results continued to grow even though conditions deteriorated.”
Consolidated revenues were nearly 4 per cent up on the year at €mn 875.7 (previous year: €mn 842.8), which was in part a consequence of the 14-month financial years of the AGRANA International companies, whose balance-sheet dates were harmonized with the consolidated group’s balance-sheet date of the last day of February. Starch operations in Austria, Hungary and Romania grew by 12 per cent in revenue terms, and the Sugar Division’s international subsidiaries grew by 14.3 per cent. Sales by the Sugar Division in Austria fell by €mn 9,2, due mainly to a decline in domestic sugar sales. Thanks to the opening up of new markets and the continuing development of higher-grade products, the Starch Division’s sales in Austria increased by €mn 10.2 to €mn 139.3, whereby the enlargement of the maize starch factory in Aschach was also a contributing factor.
The Austrian group-members accounted for 65 per cent of revenues (previous year: 68 per cent), and the companies in Central and Eastern Europe (CEECs) accounted for 35 per cent (previous year: 32).
Profit from operating activities advanced by 5.9 per cent from €mn 76.0 to €mn 80.5, increasing the group’s EBIT 1 margin (earnings before interest and tax times 100 divided by revenues) to 9.2 per cent (previous year: 9.0 per cent). CEECs accounted for 57.7 per cent of profit from operating activities (previous year: 41.4 per cent).
In the words of Board of Management member Walter Grausam, “Our exceptionally good profit from investing and financial activities and a drop in our tax ratio increased consolidated earnings for the year by 47.6 per cent to €mn 65.4 (previous year: €mn 44.3). The group’s ROCE increased from 14.8 to 15.3 per cent.”
Net cash from profit came to €mn 105.0 (previous year: €mn 90.4). That was 12 per cent of revenues and more than three times as much as outlay on investment.
Marihart: “We will therefore be proposing that the AGM of AGRANA Beteiligungs-AG on 10 July 2003 add a bonus of € 0.50 per no-par share to the dividend for the 2002/03 financial year, giving a total distribution of € 1.80 per no-par share. The distribution on our 11,027,040 no-par shares would then come to €mn 19.85 (previous year: €mn 14.35).”
The AGRANA share
The AGRANA share developed very well during the past financial year, even though the equity markets in general were in a slump. It gained 37 per cent to close 2002/03 at € 39.60, and it continued to gain powerfully during the first two months of the current financial year. It presently stands at about € 50, compared with an original issue price of € 49.78 in 1991.
The market environment
The EU Treaty of Accession was signed in Athens in April 2003. As a result, AGRANA’s strategic investments in the CEECs since 1990 have now become investments within the EU Single Market.
Sugar, isoglucose and potato starch quotas have been awarded to the accession countries, creating a important foundation for AGRANA’s future business success in Central and Eastern Europe. AGRANA’s preparations for EU membership in the CEECs will provide the best possible basis for operating in an enlarged European Union. The negotiated quotas must now be incorporated into intertrade agreements and national sugar market regimes. The group’s administrative preparations for the CEEC accessions are currently in full swing.
The world market price of sugar stabilized during the year under review as the global economic and stock markets crises encouraged investing in commodities, holding the price of sugar steady even though production far exceeded consumption.
As expected, sugar imports within the scope of the Western Balkans Agreement proved to be a problem. The EU therefore halted them for three months in May of this year.
The principal focus of the group’s international activities last financial year was on Romania. The start-up of the maize starch factory and the simultaneous discontinuation of sugar production at Tandarei and merger of the Buzau and Tandarei sugar factories to create S.C. Zaharul Romanesc S.A. were important steps forward in the restructuring process and significantly improved the group’s results in Romania. The sales activities of all the Romanian subsidiaries were concentrated within AGRANA Romania Holding-Gesellschaft at the beginning of the 2002/03 financial year. Among other things, that created the basis for further enlargement of the group’s share of the Romanian sugar market to 163,000 metric tons.
The group continued to develop and refine its sugar brands concept with success in every one of its national markets, and the spectrum of products was enlarged.
Floods during 2002 destroyed roughly 800 hectares of the beet harvest (= 1.8 per cent of the total area under beet) and, above all, reduced the potato harvest by 20,000 metric tons (= 10 per cent of the contracted total). However, the beet loss was more than offset by high levels of precipitation. The beet yield of 68.5 metric tons per hectare was 10 per cent up on the previous year, as a result of which over 3 million metric tons of sugar beet could be processed into 457,000 metric tons of sugar.
Because of the weather, the maize harvest was lengthy, making it possible to process large amounts of wet maize. Plant at the enlarged maize starch factory in Aschach was running at full capacity. The gradual increase in capacities from 750 to 1,000 metric tons of maize a day has already begun and will be completed within the scope of a three-year project.
The current 2003/04 financial year
At the beginning of April 2003, AGRANA acquired a 100 per cent stake in Danish fruit juice concentrates and fruit juice manufacturer Vallø Saft A/S, and on 30 April, the group acquired over 5 per cent of Steirerobst in Gleisdorf. The takeovers were a continuation of AGRANA’s strategy of refining agricultural raw materials at the primary stage.
The Austrian Sugar Division concluded cultivation contracts with 9,700 farmers to plant some 43,400 hectares with beet for the 2003 harvest. A beet harvest of 2.6 million metric tons is expected.
In Hungary, the Czech Republic, Slovakia and Romania, the group concluded cultivation contracts for a total of 2.3 million metric tons of beet. That is roughly the same as the amount of beet processed during last year’s campaign.
Domestic sugar sales in Austria during the first two months of the 2003/04 financial year were static on 2002/03.
In the potato starch segment, cultivation contracts were concluded for 213,000 metric tons of starch and organic starch potatoes on the basis of the quotas awarded by the EU. Contracts were concluded for roughly 15,400 metric tons potatoes and organic potatoes for the food industry. The organic potatoes segment has shown double-digit annual rates of growth in recent years, and the proportion of organic potatoes was again up on the year.
The Starch Division’s sales by volume and by value during the first two months of this financial year were both up on the same period of 2002/03.
AGRANA will be investing roughly €mn 36 in Austria during the current financial year. €mn 12.9 of that total will be invested in the Sugar Division, where outlay will focus primarily on packaging plants and raw materials and on measures to further enhance quality, cut energy consumption and improve safety.
The Starch Division will be investing €mn 23.2 in the enlargement of maize processing capacities at the Aschach maize starch factory and in new refining technologies at Gmünd.
Following peak results in the 2002/03 financial year that were in part operationally driven and in part due to the changeover of the balance-sheet dates of the AGRANA International companies and one-off investment earnings in the Annual Financial Statements, profits this year are expected to come under pressure because of the absence of those extraordinary factors and the adverse development of prices.
The first half should make it clear how quickly the candidate countries are going to translate their preparations for accession into concrete changes in market conditions and to what extent the European Union is going to act to deal with the consequence of the Western Balkans Agreement.
Key Data for the AGRANA Group (applying IAS)
|Profit from operating activities||€mn||80.5||76.0|
|Profit before income tax||€mn||87.2||64.1|
|Consolidated earnings for the year||€mn||65.4||44.3|
|Net cash from profit applying IAS||€mn||105.0||90.4|
|EBIT 1 margin||%||9.2||9.0|
Performance on the stock exchange
|Earnings per share||€mn||5.93||4.02|
|P/E ratio (close of financial year)||6.7||7.3|
|Stock-market capitalization (close)||€mn||59.4||44.2|
AGRANA’s Events, Publications & Dividends Calendar for 2003/04 (Provisional)
|Reporting period||Publication on|
|2002/03 financial year|
|AGM||2002/03 financial year||10 July 2003|
|Dividend ex-day||2002/03 financial year||15 July 2003|
|Dividend pay-day||2002/03 financial year||15 July 2003|
|2003/04 financial year|
|1st Quarter Report||1 March – 31 May 2003||14 July 2003|
|2nd Quarter Report||1 June –31 August 2003||13 October 2003|
|3rd Quarter Report||1 September – 30 November 2003||16 January 2004|