Agrana Profits Sweeten in Q1

13 Jul 2017 --- Agrana has kicked off the 2017/18 financial year with a strong rise in EBIT. The group’s revenue increased slightly to €684.2 million in the first quarter ended 31 May 2017, up 2.8 percent from the first three months of the prior year. EBIT, at €69.8 million, was up by a compelling 48.5 percent from the year-earlier quarter. The growth in the group’s EBIT was driven especially by the very positive ethanol price trend in the starch segment, but also by better earnings in the sugar segment. In the fruit segment as well, EBIT exceeded the year-ago level.

“The good start to this financial year, which surpassed our already optimistic initial expectations for the first quarter, recently allowed us to raise our guidance for the full year. We are also pleased that all three business segments are contributing to this good performance,” Agrana Chief Executive Officer Johann Marihart sums up the financial year to date. 
 
Sugar Segment
The Sugar segment's revenue in the first financial quarter was in line with one year earlier. While a positive effect came from a year-on-year rise in sugar prices, sugar sales quantities were down. The accompanying higher contribution margins were the key reason for the significant increase in EBIT. 
 
Starch Segment
Starch segment revenue rose by 8.6 percent in the first quarter. The growth compared with the year-ago quarter resulted mainly from higher bioethanol prices and an increase in sales volumes of starches. EBIT of € 26.6 million represented a near-doubling from one year earlier, driven primarily by the high bioethanol quotations. 
 
Fruit Segment
Fruit segment revenue rose slightly by 1.1 percent from the first quarter of the prior year. In the fruit preparations business, stable sales volumes and favorable currency effects (notably in Eastern Europe, the USA, Brazil and South Korea) were responsible for the revenue growth. In the fruit juice concentrate operations, revenue decreased from the year-earlier quarter, as a result of lower raw material prices and the associated reduction in concentrate prices for product from the 2016 crop compared to 2015. EBIT of the Fruit segment overall grew by 8.2 percent from the prior year's comparative period. Both the fruit juice concentrate business (partly through volume and margin growth in beverage bases) and the fruit preparations business contributed to the earnings improvement. 

Outlook
Agrana currently expects Group revenue to increase moderately for the 2017/18 financial year, with significant growth in operating profit (EBIT). Total investment by the Group in the year, at about €140 million, will significantly exceed depreciation of approximately €96 million.

Earlier in the week, the company announced plans to double wheat starch capacity in Austria.