A/S Trigon Agri completes early crop harvest with strong yields

A/S Trigon Agri has completed the early crop harvest with strong yields both in Ukraine and Russia.

The average yield of early crops this year is the highest we have achieved in Ukraine in the history of our operations in the country. Winter wheat yield of 5.61 tonnes per hectare in Kharkov, our largest unit in Ukraine, exceeds the national average by 50%.

In Rostov the winter wheat harvest has been completed at an average yield of 3.72 tonnes per hectare. This is the best we have ever achieved in our Russian operations and even exceeds the 3.4 t/ha we targeted initially for 2014.

The forward sales of early crops concluded in April were done at considerably higher prices than current market levels (premium of ca. 20-35 USD/T).

As of August 4, the Group has harvested 69% of the total 2014 crop area of 67 thousand hectares. Currently late crops (corn, sunflower, soya) are in good condition and the expected harvest time is in September/October.

The harvest results of early crops are as follows:

* N/S – not seeded

** Rostov cluster was acquired in 2012


2014 has for obvious reasons been an incredibly challenging year for all agri operators in Russia and especially in Ukraine given the combination of political uncertainty, military activities and low soft commodity prices. Thanks to a combination of 1) favourable weather 2) the geographical restructuring of its holdings and 3) the good relationship management has with the leading trading houses which allowed forward sales at attractive price levels to be effected and 4) its ongoing cost-cutting efforts, Trigon Agri can however report a very promising outlook based on its early harvest results (mainly wheat and rapeseed).

For the first time in Trigon Agri’s history its Russian operations will show a positive contribution towards its results. Its Ukrainian operations have delivered the best early harvest yields in the history of the Group, and a significant part of the early harvest has been sold at prices substantially higher than the currently prevailing market prices. Although it is early to predict the results of the late harvest (mainly corn/maize, soya and sunflower seed) the crops look in good condition as of now.

Based on the results in to date management is confident of a very much better financial performance on its operational activities for this fiscal year compared to last year, although the late harvest results both in terms of yields and prices achieved will of course determine the final outcome. Please keep in mind that the profitability of farming is a function of many factors. Management has to optimise input costs in relation to the targeted yields (this requires experience in farming particular sites as each year gives a better understanding) and it has to optimise revenue when taking selling decisions which can be especially challenging in uncertain times like these. Strategically it needs to ensure that its farming clusters are well positioned logistically around central machine parks and storage facilities, allowing for machinery and personnel to be effectively used, as well as being relatively close to the export ports which is where prices tend to be set (farm-gate prices in the Black Sea area tend to be FOB prices in the main ports minus the transportation costs to the port which increase with distance).

Ukraine crisis and currency devaluation

The ongoing crisis in Ukraine has not impacted our operations on the ground – harvesting is being carried out as planned. The fighting in Eastern Ukraine has not physically impacted our operations.

The Ukrainian Hryvna has devalued sharply since the beginning of the year.  Our crop revenues and majority of costs (fertilizers, fuel, machinery, etc.) are linked to the US dollar, thus limiting the impact from the devaluation. Hryvna-denominated costs (labour costs, land rent) will in due course converge towards pre-crisis dollar equivalent levels. Wage pressure in Hryvnas is high and we are monitoring the market and what our competitors are doing. While we will have to increase wages, we expect that in dollar terms people will be able to achieve lower salaries than before the devaluation.

Most of the positive impact from the devaluation on our income statement is realized in 2014 and 2015 as Hryvna has dropped more than the local prices increased – this impact will gradually decrease.

Update on the cost-cuts

As of the date of this report the cost-cutting programme is on track and total targeted cuts in the core business are ahead of the previously communicated figure of over EUR 6 million.


Investor enquiries:

Mr. Ülo Adamson,

President and CEO of Trigon Agri A/S

Tel: +372 66 79200


About Trigon Agri

Trigon Agri is a leading integrated soft commodities production, storage and trading company with operations in Ukraine, Russia and Estonia. Trigon Agri’s shares are traded on the main market of NASDAQ OMX Stockholm. Trigon Agri is managed under a management agreement by Trigon Capital, a leading Central and Eastern European operational management firm with around USD 1 billion of assets under management.

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