Agrana Raises Group Forecast for Full Year
08 Oct 2015 --- In the first half of the 2015|16 financial year, AGRANA, the sugar, starch and fruit products manufacturer, posted revenue of € 1,263.5 million (H1 prior year: € 1,285.2 million). The Group's revenue thus eased mildly by 1.7% from one year earlier. Operating profit (EBIT), at € 68.7 million (H1 prior year: € 87.0 million), was down significantly as expected, with a decline of 21.0% from the first six months of 2014|15 as a result of the sustained negative price situation for sugar.
While EBIT in the Starch segment improved markedly compared to the year-earlier period, and, in the second quarter, contributed to Group-level EBIT growth of 9.1%, revenue in the Sugar segment remained down amid the lasting low sugar market prices and led to the anticipated weaker EBIT result for Sugar. In the Fruit segment, EBIT eased moderately as a result of poorer earnings in fruit juice concentrates.
AGRANA Chief Executive Officer Johann Marihart says: "The current adverse sugar price situation had a strong impact on our results for the first half of the year. On the other hand, the present high ethanol prices are boosting operating profit in the Starch segment and thus for the Group as a whole. As a result of the improved projected margin in the ethanol business, we were also able to raise our Group EBIT forecast for the full financial year. Once more, our strategy of diversification across the three pillars of Sugar, Starch and Fruit has proved invaluable in cushioning the effects of earnings fluctuations."
Net financial items in the first half of the year amounted to a net expense of € 11.2 million (H1 prior year: net expense of € 8.1 million); the year-on-year increase in expense resulted primarily from net currency translation losses. After an income tax expense of € 13.6 million, corresponding to a tax rate of about 23.7% (like one year earlier), profit for the period was € 43.9 million (H1 prior year: € 60.2 million). Earnings per share attributable to shareholders of AGRANA were € 3.08 (H1 prior year: € 4.03).
Net debt as of 31 August 2015 stood at € 373.0 million, up by € 42.7 million from the 2014|15 year-end level. The gearing ratio rose accordingly to 31.8% as of the mid-year balance sheet date (28 February 2015: 27.7%). Total assets eased moderately compared with 28 February 2015, from € 2.41 billion to € 2.22 billion, and the equity ratio rose from 49.6% to 52.9%.
Sugar segment revenue in the first half of 2015|16 declined by 8.8% year-on-year to € 345.0 million. Revenue from by-products retreated slightly. Given the lasting negative market price situation, Sugar EBIT as expected was down significantly to € 6.4 million, but it was positive again in the second quarter after the first quarter´s negative result.
The Starch segment's revenue in the first half of 2015|16 was € 352.7 million, somewhat higher than in the same period one year earlier. The revenue growth came especially from the bioethanol business, which benefited from higher selling prices. EBIT of € 31.1 million significantly surpassed the year-earlier result, by 23.4%. This operating profit growth was driven above all by the improved sales prices for ethanol; at the same time, average raw material costs for the Starch segment as a whole also eased slightly year-on-year.
Fruit segment revenue increased by 1.8% in the first half of 2015|16 to € 565.8 million. In the fruit preparations business the revenue growth of approximately 10% resulted from higher sales volumes and prices. In fruit juice concentrates, selling prices of apple juice concentrate were down sharply and revenue thus fell by about 20%, with the consequence of lower earnings. EBIT for the whole Fruit segment in the first six months was € 31.2 million, or 7.4% less than one year earlier.
AGRANA continues to expect Group revenue to remain steady in the 2015|16 financial year. For operating profit (EBIT), the Group is now projecting only a moderate instead of a significant decrease, provided the ethanol price situation remains positive. "We should be able to almost fully make up for the likely weak EBIT result in the Sugar segment through year-on-year EBIT growth in the Starch and Fruit segments. The improved outcome projected in our revised full-year forecast will also be made possible by other factors, such as lower campaign costs and energy savings," comments CEO Marihart. The budgeted investment for the 2015|16 financial year, at approximately € 93 million, will be slightly above depreciation.
