Agrowill Group AB revenues grew almost 20 percent
According to unaudited data, the consolidated earnings of Agrowill Group, the largest agricultural investment and development company in the Baltic states, in the first half of this year totalled LTL 18.7 million, up by 19% from LTL 15.7 million in the same period last year.
“The increase in Agrowill Group’s earnings is related to our targeted development in the dairy sector. Although the milk purchase price is currently lower than we planned at the start of the year, investments in efficiency improvement have already produced positive results,” Valentas Šulskis, General Manager of Agrowill Group, said. In the first half of the year, the company’s income from milk production rose by over 26%, year-on-year, to LTL 14.9 million.
“It should be pointed out that in the first half of the year Agrowill Group incurred a lot of extraordinary one-off costs that had not been incurred in previous periods. These are the costs of the primary issue of shares and bond issues intended for the Group’s development. In the first six months of the year, Agrowill Group’s EBITDA, less these extraordinary costs, amounted to LTL 7.3 million, up by 18% year-on-year,” Šulskis said. According to unaudited data, in the first six months of the year, the Group suffered a loss of LTL 2.8 million. In the same period of 2007, it earned a profit of LTL 27.3 million.
“However, these figures and periods cannot be compared. In 2007, over LTL 26 million profit was brought by revaluation of investment properties and negative goodwill recognised as income during our acquisition of the Land Development Fund group of companies. Meanwhile, in 2008, we incurred a lot of extraordinary costs not related to the main activities. We evaluate our performance by analysing operating income and EBITDA figures. Therefore, the increase in these figures compared to last year shows that we are on the right track of development of the Group’s activities,” Domantas Savičius, Finance Director of Agrowill Group, said. In his words, the results should be compared excluding all extraordinary transactions: in such a case, profit in the first half of 2008 makes up some LTL 0.1 million and that of 2007 amounts to LTL 1.0 million.
“We see these results as interim. Lower profitability compared to 2007 was also determined by higher operating costs influenced by the start of active development. There is a strong team of experienced specialists, which can operate some 30–40 agricultural companies in the Baltic states. The results were also influenced by our planned and completed acquisitions: the costs of legal and financial inspections, consulting services as well as the costs of financing. Preparing for further rapid development of the Group, we want to undertake ambitious projects such as construction of a breeding ground and mega farms. Therefore, we have prepared implementation and environmental impact analyses of these projects and have consulted the world’s best specialists in their area,” Šulskis said.
Agrowill Group’s forecasts for 2008 excluding acquisitions completed in the second half of this year include earnings of over LTL 58 million, i.e. a rise by over 36%, and some LTL 18 million EBITDA, i.e. a surge by some 40% compared to 2007. The company plans to achieve the established objectives.
At the start of the second half of the year, Agrowill Group acquired Polva Agro, the most productive Estonian dairy company. The acquisition of Grūduva, one of the most modern agricultural companies in Lithuania, will be completed in the nearest future. The company is also awaiting permission from the Competition Council for the completion of the acquisition of agricultural company Tetirvinai. In 2007, the sales of these three companies totalled some LTL 39 million and EBITDA stood at some LTL 17 million. “In view of these significant acquisitions, we intend to revise Agrowill Group’s forecasts for 2008, adding the results of the new companies for the remaining part of the year,” Šulskis said. At the end of the year, the company plans to present investors with pro-forma reporting forms that would reflect the Group’s financial situation if all the acquisitions in 2008 were carried out on 1 January.
According to the General Manager of Agrowill Group, active development will be continued in the nearest future. Negotiations for the acquisition of several companies in Lithuania and Estonia are underway. “Development possibilities are analysed in the fertile black earth region: we are considering possibilities to acquire several companies in Russia and are actively working on development in Kazakhstan and Moldova,” Šulskis said.