A/S Trigon Agri 1H 2012 Interim Report: strong result despite difficult weather
Highlights of 1H 2012
Total revenue, other income, fair value adjustments and net changes in inventory for 1H 2012 amounted to EUR 47,429 thousand (EUR 45,249 thousand in 1H 2011).
Cost of purchased goods for trading purposes amounted to EUR 6,331 thousand in 1H 2012 (EUR 2,518 thousand in 1H 2011)
Total operating expenses amounted to EUR 26,946 thousand in 1H 2012 (EUR 21,689 thousand in 1H 2011).
EBITDA in 1H 2012 amounted to EUR 16,130 thousand (EUR 21,042 thousand in 1H 2011).
EBIT in 1H 2012 amounted to EUR 11,946 thousand (EUR 17,251 thousand in 1H 2011).
The Net profit of the Group in 1H 2012 amounted to EUR 7,708 thousand (EUR 16,026 thousand in 1H 2011).
The consolidated assets of the Group as of June 30, 2012 amounted to EUR 212,922 thousand (EUR 194,360 thousand at December 31, 2011).
Chairman’s comment
Difficult weather conditions
As widely reported in the media, this summer has seen exceptionally difficult weather conditions in parts of Russia and Ukraine. Some of our southern areas in both Russia and Ukraine have been very hard hit by drought. As much as 38% of the cultivated land area has seen extreme drought conditions which has led to the harvest from these land areas largely being written off.
Continued underlying improvement in financial results
Despite the impact of the drought we are pleased that the strong and continuously improving efficiency levels achieved in our operations, as well as the solid price environment, have limited the impact of the lower harvest. The positive EBITDA of over EUR 16 million for the first half year shows that the work done over recent years has borne fruit, allowing us to generate positive results even when we are impacted by extreme weather conditions.
Rostov land swap expected in Q3/Q4 2012
We are finalizing the legal steps required to complete the previously announced Rostov transaction. The targeted closing of the transaction is in Q3-Q4 2012. This land swap will put us into a position where the vast bulk of our grain production will be taking place close to export ports, and a significant part of the production will over time take place on irrigated land. This will significantly decrease our exposure to weather risk and should lead to a sharp increase over time in our average crop yields.
Continued progress in the development of the milk production operations
Our milk operations have shown continued improvements and we continue to prepare for significant expansion roughly tripling the number of milking cows over the coming years which should make us the largest EU registered milk producer. To finance the planned expansion we, as explained in previous communications, will look to invite outside private investors to become shareholders in Trigon Dairy Farming. Trigon Agri will however retain at least a 50% stake in the dairy operations.
Outlook
Due to the drought, this year’s aggregate harvest is currently estimated to be 14% below the tonnage volume achieved last year. However, the full year result will depend on the weather conditions during the remaining harvest. The result is also dependent on how the soft commodity prices will develop in Russia and Ukraine. Fears of export restrictions have stopped Russian and Ukrainian prices from rising anywhere near as much as international prices. For example over the last three and a half months the wheat price on CBOT in Chicago has increased by 47% compared to an increase in Ukraine of 9% and in Russia of 25%. We plan to hold on to inventory in particular in Ukraine, where we feel that the risk of export restrictions is much lower than in Russia, in order to take advantage of the price rises we expect to see.
Telephone conference details
A telephone conference will be held today, Friday 31 August, at 10.00 CET.
Program: Joakim Helenius, Chairman of the Board, and Ülo Adamson, President and 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:
UK: + 44 (0) 203 043 2436
SE: +46 (0)8 505 598 53
FI: +358 (0) 923 101 527
NO: +47 215 111 88
DK: +45 369 541 87
CH: +41 (0) 445 806 524
US: +1 866 458 4087
The presentation material will be available under the “Investor Relations” section at www.trigonagri.com before the telephone conference starts.
Investor enquiries:
Mr. Ülo Adamson, President and CEO of Trigon Agri A/S, Tel: +372 66 79200, E-mail: [email protected]
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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