Agromino A/S: 4Q 2017 Interim Financial Report
- Overall the business turned to a net profit of EUR 3.5 million for 2017 from a net loss of EUR 25.1 million in 2016
- Lower financial costs by EUR 5.0 million
- Share of profit EUR 1.5 million from investments in shares of TDFE against a loss of EUR 1.4 million in 2016, note that this is a non-cash item as dividends are not paid at present
- No loss from discontinued operations for 2017 against a loss of EUR 23.5 million in 2016
- 2017 EBITDA of EUR 5.5 million against EUR 4.7 million in 2016
- Summer crop yields reduced by drought and high temperatures in August 2017
- Increased production costs partly offset by lower legal and consulting fees
- Disposal of a part of non-core elevator business for EUR 1.1 million, resulting in a profit of EUR 0.6 million included in 2017
- Revaluation of land in Russia, loss of EUR 1.4 million included in the Income Statement for 2017 (loss of EUR 5.5 million in 2016)
- We have taken the conservative approach and written down the doubtful prepayment for fertilizers in the amount of EUR 1.3 million for 2017, court cases are ongoing
- 2018 winter crops in better condition than might have been expected
- Autumn 2017 very dry across all regions until October 25th, resulting late germination of the wheat sown after summer crops
- A long and mild Autumn has encouraged more crop growth which is positive
The final quarter in the Agricultural year physically consists of the completion of the year’s harvest, the completion of the autumn sowing program and cultivations to make ready for the spring sowing campaign in the next year. All these processes occurred on time. The Autumn was not perfect climatically and also the dry conditions allowed field work to progress rapidly, the negative side was that much of the wheat crop did not germinate until the third week of October and an area of Oilseed Rape in the Nikolaev region failed to establish and will be replaced in the Spring. A big positive has been an exceptionally warm end to the year, which has allowed the winter crops that survived the autumn drought conditions to continue to develop for six weeks longer than would normally be expected. This to a degree has negated the late germination effect. Our Controlled Traffic Farming program (CTF) is now well underway with 11,000 hectares of Winter crop area established using the technique and 4,000 hectares of the 2018 Spring crop area prepared for CTF, using a combination of Strip Till, Low Till, and No-Till cultivations.
At the Russian dairy farm, Dobruchi, the story is positive. The new management team has been very proactive, improved animal welfare, better grouping, and feeding strategies, and the move to three times a day milking has not only increased annual milk production by 13% but has most importantly reduced the cost of production per milk litre sold by 6% (in rouble terms). What is exciting is that the improved result has been achieved far earlier than we predicted and that there is still more potential to unlock in the business.
Since Spring 2016 the Company has been through an intensive restructuring phase which is still ongoing. As has been detailed before, the aims and objectives of this phase being to divest any non-contributory non-core assets so that management can fully focus on the core business which is agricultural production in Ukraine. This process has involved taking some pain along the way but it is very pleasing to begin to see the results of this restructuring start to bear fruit. It reinforces that the underlying strategy is correct and that as a team we must look to make the necessary further adjustments to the business towards showing real value and return to our shareholders.
The net profit for the year is EUR 3.5 million which compares with a net loss of EUR 25.1 million in 2016, and EUR 53.0 million in 2015. The core business is agricultural production and it is important to strip out the exceptional figures that may mask what is happening in that core. Included in the profit EUR 3.5 million are the sale of an elevator, the revaluation of Russian land plots, a share of profit from investments and the write off of non-delivered fertilizer; these net out at a loss of EUR 0.6 million. Therefore, the real net profit from actual operations is close to EUR 4.1 million. In a year where commodity prices have remained low and yields have not been spectacular, the result can be considered reasonably satisfactory.
Telephone conference details
A telephone conference will be held today, on 28 February, 2018 at 10:00 CET.
Simon Boughton, CEO will present and comment upon the results. There will also be an opportunity to ask questions.
To participate in the telephone conference, please call one of the following numbers:
DK: +45 35 445 575
FI: +358 981 710 492
UK: +442 030 089 806
NO: +47 23 500 254
SE: +46 856 642 662
Mr. Simon Boughton, CEO of Agromino A/S Tel: +372 6191 500, e-mail: email@example.com
We are farmers and agribusiness managers, with operations in Ukraine, Russia and Estonia. Agromino A/S shares are traded on the main market of Nasdaq Stockholm.
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This information is information that Agromino A/S is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08:00 CET on 28 February 2018.