Agroland Agribusiness, the company that specializes in selling agricultural inputs to the Agroland Group, generated operating income of 25.9 million lei in the first half of the year, an increase of 87% over the same period last year, according to the company. Financial statements listed on the Bucharest Stock Exchange.
As for EBITDA, it reached 2 million lei, double (+108%) compared to the same period in 2021, while the net profit for the first six months of 2022 was 1.2 million lei, an increase of 53 % compared to the same period in 2021. The largest increase in sales volume was recorded in fertilizers, which increased by 113% in the first six months of 2022 to reach 10.8 million lei. The second most significant increase was recorded in pesticides, which increased by 4% to 9.3 million lei, followed by seed sales of 6.6 million lei, up 39%.
“The first and most important consequence of the drought was the lower production of all crops in 2022 compared to 2021 – which led to higher prices for all commodities, increased need for financing from farmers, as well as a trend towards their general ability to keep stocks of goods. Therefore, what was not sold Approximately 30% of the volumes harvested on June 30, 2022,” explained Florin Radu, General Manager of Agroland Agribusiness, in a letter to investors.
The statement also comes in the context that the company, in the second quarter of the year, started the grain trading business, which generated revenue of 3.1 million lei. With this type of business, the company wants to supplement its income and recover receivables more quickly, before the due date specified in the culture.
Basically, the company buys grains and oilseeds from farmers with an area of 100-500 hectares which they later sell to big traders who work only at fixed points or only in ports. It currently covers the south of the country (Dolj, Olt, Mehedinți, Argeș, Teleorman, Vâlcea, Gorj, Dâmbovița, Ilfov, Ialomița, Călăraşi, Tulcea, Brăila and Constanța), but it wants to expand to the west as well, where parent company Agroland is very famous.
“Despite the challenges of the drought, and also due to the careful selection of the farmers we work with and deliver the products to, we have no issues collecting receivables. Most of the receivables are due on July 30, 2022 and September 30, 2022, and at this time, 95% of the receivables have been collected. Due at the end of July. Our target for this year is for receivables not to exceed 55% of trading volume. We believe this limit is a good limit for business and protects us from significant risk of non-payment, which could have a negative impact on our business continuity. Florin added Radu: “Given the current level of revenue, we remain optimistic, even if this agricultural year will be a difficult year.”
Higher prices and lower discounts
Apart from the diversification of the activity and the expansion of the product portfolio which contributed to the increase in revenue, Agroland increased its financial performance including by granting lower discounts, in line with the market trend. Specifically, the company granted trade discounts of 4.1 million lei, 28% lower than the level of the first half of 2021, despite the increase in sales, which amounted to 29.9 million lei (sales without discount).
“In the current context of rising inflation that has led to higher costs for raw materials, energy and utilities, prices have also gone up in the agribusiness, and discounts offered to customers have fallen in line with the market,” the company explains.
In the first half of 2022, Agroland Agribusiness expanded its product range under its own brand and started and completed the steps for developing new types of wheat, barley and millet, which will be marketed under its own brand. Agroland Agribusiness also continued to strengthen its sales and operations team to serve the continued growth of its client portfolio, with the number of employees within the company doubling from the same period last year. Agroland Agribusiness billed more than 340 clients in the first half of 2022, of which 86 new clients were attracted in the second quarter of the year.
For the second part of the year, Agroland Agribusiness plans to expand into new areas by increasing its sales team and developing its trade and logistics divisions. The company will also continue to focus on developing exclusive products, both on the nutritional side and on the plant protection side.
The shares of Agroland Agribusiness SA are listed on the AeRO market of the Bucharest Stock Exchange starting June 15, 2021 and traded under the symbol AAB. Currently, the company’s market capitalization is more than 38 million lei.