AGRANA Reports Significant Earnings Improvement in Q1

After the prior year’s upheaval in raw material markets and exchange rates as well as high energy prices, AGRANA’s business in the first quarter of 2009|10, as expected, unfolded in a significantly more stable environment again.

15/07/09 In the first quarter of 2009/10, AGRANA, the sugar, starch and fruit group, achieved revenue growth of € 11.1 million or 2.2% to € 506.2 million (prior year: € 495.1 million). Operating profit after exceptional items improved by 27.4% from € 15.7 million to € 20.0 million and profit before tax grew to € 21.0 million (from € 11.6 million in the first quarter of the prior year) thanks to a combination of higher profits and exchange rate effects.
 
“After the prior year’s upheaval in raw material markets and exchange rates as well as high energy prices, AGRANA’s business in the first quarter of 2009|10, as expected, unfolded in a significantly more stable environment again. The good results in Starch thanks to lower raw material and energy prices outweighed the slightly weaker earnings situation in the Sugar and Fruit segments,” comments AGRANA Chief Executive Officer Johann Marihart on the business performance.
 
The Fruit segment generated the largest revenue share of 40.5%, followed by the Sugar segment with 34.7% and the Starch segment with 24.8% of Group revenue.

The foreign exchange losses incurred but unrealised in the last financial year as a result of the declines in some Eastern European currencies were partly recouped through currency gains in the first quarter of 2009|10. This and a lower-cost financing mix, combined with falling interest rates, led to positive net financial items of € 1.0 million (up from a net financial items expense of € 4.1 million). The Group’s profit for the period increased to € 16.7 million (from € 7.4 million in Q1 2008|09). Earnings per share were € 1.19, compared to € 0.56 one year earlier.
 
Despite a reduced sugar quota, sugar segment revenue improved to € 175.5 million (Q1 2008|09: € 170.6 million) thanks to higher sales of non-quota sugar. Owing to non-recurring higher expenses in the holding company, the operating profit of € 3.9 million before exceptional items did not reach the year-earlier level of € 5.6 million.
 
The Starch segment generated revenue of € 125.5 million (Q1 2008|09: € 114.8 million) in the first three months. The main driver of this growth was the inclusion of bioethanol sales from the plant in Pischelsdorf, Austria, which had not yet been in operation in the year-earlier quarter. Operating profit before exceptional items rose to € 11.1 million (Q1 2008|09: € 4.2 million) in the Starch segment.

In the Fruit segment, fruit preparations showed an almost level performance year-on-year in the quarter both in volumes and prices, while the concentrate business reflected the significant reduction in selling prices of apple juice concentrate. Fruit segment revenue therefore eased to € 205.2 million (Q1 2008|09: € 209.7). Operating profit before exceptional items decreased to € 5.0 million (Q1 2008|09: € 8.3 million).
 
The environment for the business performance of the AGRANA Group going forward has not changed materially since the beginning of the financial year. For the full year 2009|10 AGRANA therefore continues to expect Group revenue at the prior-year level, and a significant recovery in operating profit before exceptional items compared with last year’s sharply depressed result.
 
In the Sugar segment, the key factors governing a profit improvement will be the extent of the reduction in energy prices, the further enhancement of the production cost structure and the elimination of the restructuring levy for the new sugar production beginning in autumn 2009.
 
In the Starch segment, AGRANA plans to make up for the expected macroeconomically driven revenue decrease in industrial starch products by full utilisation of the bioethanol capacity in Austria and Hungary.
 
In the Fruit segment, slight revenue growth is expected despite a business environment marked by restrained demand. In fruit juice concentrates, prices are likely to remain low unless there are weather-induced crop losses.