AGRANA – Strong growth during the first half-year 2006|07 Ad-Hoc

Revenues recorded by the AGRANA Group rose by 28% over the comparable prior year figure of € 723.5 million to € 923.2 million for the first half of the 2006|07 financial year.

Date: 12.10.2006

Revenues recorded by the AGRANA Group rose by 28% over the comparable prior year figure of € 723.5 million to € 923.2 million for the first half of the 2006|07 financial year.

Income from operations increased 24% to € 59.3 million during the same period (2005|06: € 47.8 million).

“We continued the steady pursuit of our growth course during the first half of 2006|07. This is reflected in the initial consolidation of the former DSF and previous Atys Group, two fruit companies that are now wholly owned by AGRANA.

In addition, advance exports of C sugar and the satisfactory development of the Starch Segment and Fruit Segment provided support for the improvement in revenues“, commented AGRANA CEO Johann Marihart on the development of business during the first six months of 2006|07.

Profit before tax for the first half-year equaled € 48.9 million, which represents a plus of 9% over the prior year (first half-year 2005|06: € 44.8 million). Net profit for the period reached € 33.4 million, but remained below the comparable 2005|06 figure of € 34.6 million because of an increase in the tax rate from 23 to 32%.

In spite of the decline in net profit, earnings per share rose to € 2.23 (first half-year 2005|06: € 2.12) due to a reduction in minority interests.

Investments totaled € 50.5 million for the first half of 2006|07, compared to € 38.4 million in the previous financial year, and reflected the continued growth of the AGRANA Group.

AGRANA – Key Data according to IFRS (March 1 to August 31)

 

First Half-Year 2006|07

First Half-Year 2005|06

Revenues

m€

923.2

723.5

Income from operations

m€

59.3

47.8

Profit before tax

m€

48.9

44.8

Net profit for the period

m€

33.4

34.6

Earnings per share

2.23

2.12

Investments in tangible assets

m€

50.5

38.4

Employees

7,972

8,055

Net financial expense for the first half of 2006|07 totaled € 10.4 million compared to net financial expense of € 3.1 million in the previous year as a result of recognized negative foreign exchange differences and an increase in interest expense that was related to acquisitions in the Fruit Segment.

Revenues by segment are shown in the following table:

in m€

First Half-Year 2006|07

First Half-Year 2005|06

Sugar Segment

449.0

412.4

Starch Segment

119.3

115.9

Fruit Segment

381.7

217.0

Inter-segment sales

- 26.8

- 21.8

Revenues AGRANA Group

923.2

723.5

The Sugar Segment
Revenues in the Sugar Segment rose by 9% to € 449.0 million for the first half of 2006|07 (first half-year 2005|06: € 412.4 million).

This growth resulted above all from significantly higher C sugar sales during the first quarter of the current financial year, which were moved forward following the termination of export allowances by the WTO Panel.

In addition, prices in Hungary, the Czech Republic and Slovakia improved slightly compared to the first six months of the prior year. Income from operations for the first half of 2006|07 increased to € 28.6 million (first half-year 2005|06: € 22.8 million).

During the first half of 2006|07 sales volumes of sugar in Austria increased by 12%. AGRANA was able to expand its market position in Hungary, the Czech Republic, Slovakia and Romania with a consistent brand and product mix strategy.

During the 2006 campaign the AGRANA Group expects to harvest 4.92 million tons of sugar beet (2005|06: 5.89 million tons) and extract roughly 731,000 tons of sugar (2005|06: 895,000 tons).

Including white sugar from raw sugar refining, the volume of sugar is forecasted to reach approximately 950,000 tons during the current financial year.

In Bosnia-Herzegovina construction started on a raw sugar refinery, which is scheduled to start operations in 2007.

The Starch Segment
Higher sales volumes in Austria supported an increase of 3% in revenues recorded by the Starch Segment, which rose from € 115.9 million in the first half of the previous year to € 119.3 million for the first six months of 2006|07.

Income from operations declined to € 13.4 million (first half-year 2005|06: € 15.6 million) because of higher energy costs and lower isoglucose prices.

Against the backdrop of these developments, the Group continued to shift the focus of the product mix in Austria toward specialty starches with higher value-added.

The only potato starch plant in Austria is located in Gmünd, and here the 2006 campaign is expected to process roughly 201,000 (2005|06: 246,000) tons of starch potatoes into approximately 45,000 tons of starch.

Corn processing in Austria, Hungary and Romania is expected to total roughly 809,000 for the 2006|07 financial year.

The expansion of corn processing capacity at Hungrana to 1,500 tons per day was successfully completed. In addition, planning has started to double capacity to 3,000 tons per day and increase bioethanol capacity from 50,000 m3 to 160,000 m3 per year.

Bioethanol
On September 7, 2006 AGRANA laid the cornerstone for a new bioethanol plant in Pischelsdorf, Lower Austria, which will have an annual capacity of up to 240,000 m3.

The start of operations is scheduled for the third quarter of 2007|08, and the investment in this project will total approximately € 125 million.

The Fruit Segment
During the first half of the calendar year (January 1 to June 30, 2006) revenues in the Fruit Segment rose to € 381.7 million (first half-year 2005|06: € 217.0 million) and income from operations increased to € 17.2 million (first half-year 2005|06: € 9.4 million).

Forecasts for the 2006|07 financial year include investments of roughly € 32 million for this segment.

The businesses acquired by the Fruit Segment in recent years have been merged as planned into two separate holding companies, which cover fruit preparations (“AGRANA Fruit”) and fruit juice concentrates (“AGRANA Juice”).

AGRANA Fruit is currently constructing a new plant for fruit preparations in Brazil at an initial investment of roughly € 5 million, and the production of fruit preparations for the Brazilian dairy industry is scheduled to start in April 2007.

The new Brazilian subsidiary, AGRANA Fruit Brasil Ltda., will operate this plant at a factory site owned by Ricaeli, a Brazilian frozen foods company that will hold a stake of up to 25% in the new firm.

Revenues recorded by AGRANA Juice increased 17% over the comparable period of the previous year. In June 2006 AGRANA entered the market in China with the acquisition of a 50% stake in Xianyang Andre Juice Co. Ltd., a Chinese producer of apple juice concentrate.

The annual production of this company totals 30,000 tons, which translates to revenues of approximately € 24 million.

Outlook
“We will continue to pursue our strategy and realize sustainable organic growth. The projects in China, Brazil and Bosnia-Herzegovina as well as the expansion of Hungrana and the bioethanol plant in Austria will provide additional impulses for growth over the coming years“, explained CFO Walter Grausam. Revenues are expected to rise by 20% to € 1.8 billion for the full 2006|07 financial year.

This forecast also includes the adjustment of the business year in the Fruit Segment from the calendar year to the AGRANA financial year (March 1 to February 28), which means the results of this segment for January and February 2006 will also be included in the 2006|07 financial year.

The Fruit Segment will generate the largest share of revenues and earnings during the current financial year. High organic growth in the area of fruit preparations is expected for the full year.

In contrast to the first six months of 2006|07, the Sugar Segment is expected to show weaker development during the second half of the financial year. This development will be influenced by significantly higher energy costs for the campaign, lower sales volumes of quota sugar as a result of the flexible quota reduction, declining exports and first payments to the EU Restructuring Fund.

The development of business in the Starch Segment during the next two quarters will reflect the first half of the year.