AGRANA Closes the 2004/05 Financial Year with Outstanding Results
As CEO Hans Marihart announced at today’s press conference to present the balance sheet in Vienna, “The AGRANA Group achieved its best-ever consolidated results during the 2004/05 financial year, recording sharp growth in both revenues and profits. That was above all thanks to EU enlargement and the inclusion of the Steirerobst Group in the Consolidated Financial Statements.”
|Consolidated revenues|| |
€ 981.0 mn
|Profit from operating activities|| |
€ 90.8 mn
|Profit before tax|| |
€ 93.2 mn
|Consolidated earnings for the year|| |
€ 79.9 mn
Revenues broke down into segments as follows:
|Sugar Segment|| |
|Specialities Segment|| |
|Inter-segment consolidation|| |
|Consolidated revenues of the AGRANA Group|| |
Profit from operating activities was 18 per cent up on the year at € 90.8 million. As Board of Management member Walter Grausam explained, “The increase was above all attributable to an increase in our output of sugar and starch products in the wake of good harvests, the inclusion of the Steirerobst Group in the Consolidated Financial Statements, our systematic continuation of our structural and cost optimization programmes and higher sales.”
Higher earnings from the Group’s interests and lower tax rates in a number of countries increased profit after tax by 46.6 per cent to € 84.3 million.
Consolidated earnings for the year rose by 41.3 per cent to € 79.9 million, and the Group recorded an ROCE of 11.2 (previous year: 14.7) per cent.
Net cash from profit came to € 115.6 million (previous year: € 100.9 million), which was 11.8 per cent of revenues (previous year: 11.6 per cent). It therefore exceeded capital expenditure on tangible fixed assets by over 100 per cent.
As Hans Marihart went on to say, “In the light of those results, we will be asking the AGM of AGRANA Beteiligungs-AG on 7 July 2005 to increase the dividend for the 2004/05 financial year from € 1.80 to € 1.95 per no-par share, whereby the new shares issued during our capital increase in February 2005 will already rank for a full dividend for the whole of the 2004/05 financial year. That would increase our distribution from € 19.85 million to € 27.7 million.”
The AGRANA share
The price of the AGRANA share continued to rise during the financial year ended, gaining 30 per cent to € 79.85. It has thus more than tripled within three years. On 28 February 2005, AGRANA had a P/E ratio of 11.3. Its dividend yield on the basis of the dividend proposal of € 1.95 was 2.4 per cent.
The share stood at € 72.00 on 9 May 2005.
In February 2005, AGRANA successfully completed the biggest capital increase in its history. The issue of 3.175 million new shares increased the number of issued shares to 14.202 million. The free float as a percentage of issued share capital nearly doubled from 12.5 per cent to 24.5 per cent as a result, and AGRANA’s shareholder base became considerably broader.
AGRANA was admitted to the ATX (Austrian Traded Index) on 21 March and currently has a weighting of roughly 0.7 per cent.
The capital increase generated proceeds of € 229 million that AGRANA will be using to press ahead with growth. They will finance further corporate acquisitions and the capitalization of subsidiaries in the starch, bioethanol and fruit sectors.
Sugar DivisionOn 29 April 2005, the WTO rejected the European Union’s appeal against the WTO Panel ruling of September 2004, according to which the die EU has been exporting more sugar than permitted. As a result, production of C sugar, which is deemed to have been cross-subsidized by the quota system, will either have to cease or other means of utilization will have to be found. In addition, re-exports of sugar imported into the EU from the ACP countries (Africa, Caribbean, Pacific), previously totalling up to 1.3 million tonnes a year, can no longer be subsidized. Consequently, the quota reduction in the Commission Proposal of June 2005 will have to be increased by that amount of sugar from the ACP countries.
The Sugar Division’s revenues increased by nearly 2 per cent to € 671.6 million during the 2004/05 financial year. That was attributable to higher sugar prices in the Group’s markets in the new EU member-states—Hungary, the Czech Republic and Slovakia—in the wake of their accession to the EU and the intensification of sales activities by the Group’s sugar subsidiaries in Romania. However, in Austria, the Sugar Division suffered a decline in sales by volume and value as a result of stiffer competition in the face of cheap sugar imports from Eastern Europe and the lack of sufficient sugar for export purposes following a poor sugar beet harvest in 2003. The sugar market was also in the sway of 12 per cent increase in world market prices, but that was partially neutralized by the development of the €/US$ exchange rate.
The weather was better than in 2003. Adequate precipitation and sunshine increased the Austrian beet harvest to 2.9 million tonnes (previous year: 2.5 million tonnes), allowing the extraction of roughly 458,000 tonnes of white sugar (previous year: 386,000 tonnes). Sugar volumes also increased sharply in Hungary, Slovakia and the Czech Republic.
Overall, the AGRANA Group processed 5.1 million tonnes of beet (previous year: 4.2 million tonnes) into 797,000 tonnes of sugar (previous year: 636,000 tonnes) during comparatively long and very efficient campaigns. In addition, the Group manufactured 147,000 tonnes of white sugar from imported raw sugar in Romania (previous year: 139,000 tonnes).
The Starch Division’s revenues increased in both Austria and Hungary, leading to an overall advance of 11 per cent to € 220.6 million. The growth in revenues combined with a consistent focus on speciality products considerably improved profits.
AGRANA was able to make full use of its EU potato starch quota thanks to very good potato harvest with increased starch content, its assumption of freight costs and the enlargement of areas under contract for potato growing. The enlargement of the Aschach potato factory continued according to plan, so its target capacity of about 1,000 tonnes a day will be reached from the 2006/07 financial year. Excellent maize harvests in Hungary and Austria meant that it was possible to process cheap freshly harvested maize for a comparatively long period. However, falling maize prices put pressure on starch prices.
The entirety of Hungary’s EU isoglucose quota of 137,627 tonnes was allocated to the Hungrana maize starch and isoglucose factory, which is the only isoglucose manufacturer in Hungary. That makes Hungrana Europe’s biggest manufacturer of isoglucose, putting it in an excellent competitive position.
Maize starch production in Hörbranz (Vorarlberg) ceased at the end of February 2005 for economic reasons and was transferred to the Aschach factory.
Following the creation of the statutory framework for the use of power ethanol in Austria and a resolution by the Supervisory Board on 12 May 2005, the way is clear for the commencement of bioethanol production. The group will be building a bioethanol plant with an annual capacity of 200,000 cubic metres (corresponding to 520,000 tonnes of cereal as the raw material) in Pischelsdorf (Lower Austria) at a cost of € 105 million. Once all the necessary permissions have been received, the factory’s construction can be expected to commence in the autumn of 2005. It is to begin operation in mid-2007 so as to be able to deliver by the time tax relief for the mandatory admixture of ethanol is introduced in October 2007.
The revenues recorded by the subsidiaries in the Fruit Division (without Germany’s DSF) during the 2004/05 financial year increased to € 641 million (previous year: € 627 million) (based on pro forma consolidation). € 125 million of that total (previous year: € 39 million) was already accounted for on a fully-consolidated basis in the financial statements. The Steirerobst Group joined the Consolidated Group as of the second quarter of 2004/05.
Our promising fruit operations continued to develop well during the 2004/05 financial year. On the balance-sheet date for the 2004/05 financial year, AGRANA held a 50 per cent stake in France’s Atys S.A., which is the world’s leader in fruit preparations. It acquired another 6 per cent of the Atys Group in March 2005, with the result that Atys will be fully consolidated as of the second quarter of the 2005/06 financial year. AGRANA holds an indirect majority stake in Steirerobst AG via Steirische Agrarbeteiligungsgesellschaft m.b.H. It also acquired the entirety of Belgium’s Dirafrost Frozen Industries N.V. via Atys in 2004 and German fruit juice concentrates manufacturer Wink via Vallø Saft in January 2005.
The current 2005/06 financial year
On 25 April 2005, the agreements were signed for the EU accession of Romania and Bulgaria on 1 January 2007. That will have a major impact on AGRANA’s activities in Romania.
The AGRANA Group’s Sugar Division as a whole (Austria, Hungary, the Czech Republic, Slovakia und Romania) has concluded beet contracts with 9,966 farmers for an area of 94,526 hectares for the 2005 harvest. The areas under contract are distributed across the various countries as follows:
Area under beete
|Czech Republic|| |
The crop’s development has been in line with the long-term average this financial year.
Following the WTO panel’s decision, the EU Commission intends to present a concrete proposal for reform of the EU sugar CMO in June 2005. The goal is to pass the reform in the autumn of 2005 and put it into force by the middle of 2006. Depending on the proposals regarding quota cuts, quota transfers and “quota buying funds”, AGRANA will then decide what action to take in the capacity and cost fields.
The EU Commission’s proposal that the quota system for potato starch should be extended for the next two years on the basis of unchanged quotas is currently under review by the European Parliament. A plenary ballot in the European Parliament is to be expected at the beginning of June 2005. Contracts have been concluded with 1,984 growers for a total of 220,000 tonnes of starch potatoes and organic starch potatoes for this year’s harvest. Further contracts have also been concluded for 16,300 tonnes of potatoes and organic potatoes for the food industry. They will be used to make long-life potato products and organic ingredients.
Areas under maize during the 2005/06 financial year are likely to be virtually unchanged both in Austria (Aschach factory) and in Hungary and Romania.
In the course of the reorientation of AGRANA’s activities in the fruit juice concentrates sector, the marketing, distribution and sales activities of Steirerobst, Vallø Saft and Wink were concentrated under the umbrella of AGRANA Fruit Juice GmbH, based in Bingen, Germany, as of May 2005, and their market presence was homogenized. The Group’s 11 fruit juice concentrates factories plan to increase their apply buying from 585,000 tonnes in 2004/05 to 614,000 tonnes this financial year.
AGRANA has 26 production facilities in the fruit preparations sector. A fourth plant was opened in the USA, namely in Tennessee, in March 2005. Steirerobst’s fruit preparations plant in Serpuchov south of Moscow will go online in the summer of 2005.
In the course of optimization of the Steirerobst Group’s production facilities, the factory at Gutorfölde in Western Hungary will close this year and the plant will be moved to Hajdúsámson in Eastern Hungary, where capacities will increase accordingly.
Atys is pressing ahead with the global optimization of its raw materials sourcing and logistics and the integration of the Dirafrost Group.
Give the consolidation of the Atys Group as of the second quarter of the 2005/06 financial year and the addition of Wink and Dirafrost to the fully consolidated group, we expect revenues to increase sharply during the current financial year to total about € 1.4 billion. Profits (especially in the Sugar Division) will depend on action taken in the wake of the decision by the WTO panel, on temporary quota cuts and on reform of the EU sugar CMO. Consequently, we will not be able to make a reliable profit forecast until the end of the first half.
The first wave of acquisitions in the development of the Fruit Division with the goal of reaching critical mass has successfully been completed. In the current second phase, we plan to grow by enlarging existing facilities and expanding into new regions and we intend to improve our results by exploiting synergistic effects. In the medium term, we therefore expect the Fruit Division to account for half of our consolidated revenues.
The development of the Starch Division will be shaped by our bioethanol project over the next two years.
We aim to double our revenues in years to come. Our corporate acquisitions and capital increase have created a good basis for doing so.