Earnings Release • Jan 14, 2021
Earnings Release
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Interim statement for the first three quarters of 2020|21
Ready for the future.
1 Debt-equity ratio (ratio of net debt to total equity).
2 Average number of full-time equivalents in the reporting period.
3 Letter from the CEO
The second wave of COVID-19 hit the economy and society hard. At AGRANA, the experience gained in the first wave and the introduction of weekly antigen tests for our employees enabled us to prevent infection clusters and thus allowed us to conduct our autumn campaigns for sugar beet, potatoes and wet corn without difficulty.
At € 28.5 million, EBIT in the third quarter of 2020|21 was again better than in the year-earlier comparative period (Q1-Q3 prior year: € 18.1 million). For the first three quarters, our cumulative EBIT of € 84.3 million was therefore significantly higher than the result for the same period a year ago. Revenue increased by about 5% to € 1,965.3 million in the first three quarters of 2020|21, on stable sales volumes.
The main reason for the improved Group EBIT in the first nine months was the Sugar segment, which continued to achieve a year-on-year improvement in its EBIT result in the third quarter. Higher sugar prices and volumes contributed to this, although Sugar EBIT remained negative, due primarily to idle-capacity costs.
Owing to the small sugar beet acreage of 26,300 hectares in 2020 in Austria, the question of whether to continue to operate the sugar factory in Leopoldsdorf, Austria, was a subject of debate last summer. Thanks to the exceptionally high expected beet yield per hectare, it was decided to go ahead with the 2020 campaign at both Austrian sugar plants, but the continuing operation of the Leopoldsdorf plant beyond this campaign was tied to the requirement of contracting 38,000 hectares of beet in Austria for the 2021|22 sugar marketing year by the middle of November 2020. This condition securing the level of capacity utilisation economically necessary for the operation of both Austrian factories was met and the Leopoldsdorf plant will thus be operating for the 2021 campaign as well. The important thing now is to ensure that this planting area is brought to harvest. Both the monitoring of beet weevil larvae and the neonicotinoid treatment of the beet seed are important requirements for this. Additional security is provided by the government commitment in Austria to minimise the crop risk for beet farmers by covering potential replanting costs.
AGRANA's 2020 sugar beet campaign has been characterised by good yields per hectare, although with a very low sugar content of the beet. As a result of the amount of rain received during the summer, the sugar formation in the beet could not keep pace with the rate of beet growth. On 76,600 hectares Group-wide (prior year: approximately 76,200 hectares), we therefore expect to harvest about 4.9 million tonnes of beet (prior year: 4.7 million tonnes) and produce about the same amount of beet sugar of about 650,000 tonnes as in the prior year.
The solid earnings trend in the Starch segment in the first three quarters of 2020|21 was attributable above all to the business performance in bioethanol, which was still very good in the third quarter. The extreme volatility in ethanol prices became increasingly apparent in the course of the financial year. A plunge in March 2020 to € 350 per cubic metre was followed by a continual recovery from April with a prolonged high of € 700 to € 800 per cubic metre over the summer months and a significant decline to under € 500 per cubic metre by December 2020. The disinfectant boom seen in the first quarter of 2020|21 was not repeated in the second wave of COVID-19. Not just sugar consumption in the EU was reduced as a result of COVID-19 effects (coinciding, however, with a significant decrease in EU sugar production) but demand for saccharification and starch products also fell, leading to lower utilisation of some production plants.
In the Fruit segment, earnings in the fruit preparations business, with its global scope, were up from a year ago. However, the segment also includes the currently difficult fruit juice concentrate business, where EBIT performance was considerably weaker due to reduced available volumes from the previous year's apple crop. Added to this was a challenging 2020 apple campaign, as spring frosts cut the Hungarian apple processing volume nearly in half, resulting in substantial costs from idle capacity. On balance in the concentrate activities, we are expecting this financial year's processing volume to be about 10% less than the already low prior-year value.
We are able to report to our shareholders that, through a package of measures related to efficiency, to costs and to investment, we have succeeded despite the market conditions in delivering EBIT earnings in the first three quarters above those of one year earlier. We are thus able to reaffirm our projection of full-year EBIT of at least the prior-year level.
Today more than ever, I would like to extend a warm "thank you" to our customers, staff, suppliers and boards.
Wishing you a good 2021, and most especially, good health!
Sincerely
Johann Marihart Chief Executive Officer
| Consolidated income statement (condensed) €m, except as otherwise indicated |
Q1-Q3 2020 21 |
Q1-Q3 2019 20 |
|---|---|---|
| Revenue | 1,965.3 | 1,879.4 |
| EBITDA1 | 159.4 | 139.5 |
| Operating profit before exceptional items and results of equity-accounted joint ventures |
69.9 | 58.3 |
| Share of results of equity-accounted joint ventures |
15.2 | 11.9 |
| Exceptional items | (0.8) | (0.4) |
| Operating profit [EBIT] | 84.3 | 69.8 |
| EBIT margin | 4.3% | 3.7% |
| Net financial items | (13.4) | (11.6) |
| Profit before tax | 70.9 | 58.2 |
| Income tax expense | (17.1) | (15.1) |
| Profit for the period | 53.8 | 43.1 |
| Attributable to shareholders of parent | 54.0 | 40.1 |
| Earnings per share (€) | 0.86 | 0.64 |
In the first three quarters of the 2020|21 financial year (the nine months ended 30 November 2020), revenue of the AGRANA Group was € 1,965.3 million, up slightly from the same period one year earlier, with the growth coming primarily from the positive revenue trend in the Sugar segment.
Operating profit (EBIT) was € 84.3 million in the first three quarters of 2020|21, a significant increase from the year-ago comparative period. In the Fruit segment, EBIT decreased to € 41.3 million, a reduction of 10.0% driven
| Consolidated income statement (condensed) €m, except as otherwise indicated |
Q3 2020 21 |
Q3 2019 20 |
|---|---|---|
| Revenue | 656.0 | 629.4 |
| EBITDA1 | 58.3 | 48.7 |
| Operating profit before exceptional items and results of equity-accounted joint ventures |
22.5 | 14.3 |
| Share of results of equity-accounted joint ventures |
6.3 | 4.2 |
| Exceptional items | (0.3) | (0.4) |
| Operating profit [EBIT] | 28.5 | 18.1 |
| EBIT margin | 4.3% | 2.9% |
| Net financial items | (4.3) | (3.7) |
| Profit before tax | 24.2 | 14.4 |
| Income tax expense | (4.8) | (0.2) |
| Profit for the period | 19.4 | 14.2 |
| Attributable to shareholders of parent | 20.1 | 13.1 |
| Earnings per share (€) | 0.32 | 0.21 |
by a very significantly weaker result in the fruit juice concentrate business. High ethanol prices in the summer months led to a slight increase in EBIT in the Starch segment to € 58.5 million. In the Sugar segment, as a result of firmer prices and higher sugar sales quantities than one year earlier, the EBIT loss was more than halved to € 15.5 million (Q1-Q3 prior year: € 33.4 million). The Group's net financial items amounted to a net finance expense of € 13.4 million (Q1-Q3 prior year: € 11.6 million) due mainly to a deterioration in "other financial items" as a result largely of higher fees. After an income tax expense
of € 17.1 million, corresponding to a tax rate of 24.1% (Q1-Q3 prior year: 25.9%), profit for the period was € 53.8 million (Q1-Q3 prior year: € 43.1 million). Earnings per share attributable to AGRANA shareholders increased to € 0.86 (Q1-Q3 prior year: € 0.64).
In the first three quarters of 2020|21, AGRANA invested € 47.4 million, or € 51.2 million less than in the yearearlier comparative period. Capital expenditure was thus significantly reduced upon the completion of the major projects of recent years, and was distributed among the segments as follows:
| Investment | Q1-Q3 | Q1-Q3 | Change |
|---|---|---|---|
| €m, except % | 2020 21 | 2019 20 | |
| Fruit segment | 23.9 | 31.9 | -25.1% |
| Starch segment | 13.7 | 53.4 | -74.3% |
| Sugar segment | 9.8 | 13.3 | -26.3% |
| Group | 47.4 | 98.6 | -51.9% |
In addition to the regular projects for product quality improvement, asset replacement and maintenance across all production sites, the following individual investments are worthy of note:
Expansion of the warehouse for finished product in Chung-Buk, South Korea
New production line in Lysander, New York, USA
Conversion of the energy supply of the Sered', Slovakia, site to natural gas
Additionally in the first three quarters of 2020|21, € 24.5 million (Q1-Q3 prior year: € 28.5 million) was invested in the equity-accounted joint ventures (the HUNGRANA and STUDEN groups and Beta Pura GmbH; values for these entities are stated at 100% of the totals).
The betaine crystallisation project of Beta Pura GmbH represents the Group's largest capital expenditure for the 2020|21 financial year. Together with the US partner The Amalgamated Sugar Company LLC of Boise, Idaho, about € 37 million (stated at 100% of the total) was invested in the value-added processing of by-products from sugar production at the site in Tulln, Austria. Due to the pandemic, production started with a slight delay, in August 2020. The plant's operation was ramped up over the past few months and the processes are continually being optimised.
| Q1-Q3 2020 21 | Q1-Q3 2019 20 | Change | |
|---|---|---|---|
| €m, except % | |||
| Operating cash flow before changes in working capital | 169.7 | 132.5 | 28.1% |
| Changes in working capital | (33.5) | (85.6) | 60.9% |
| Total of interest paid/received and tax paid, net | (18.0) | (15.8) | -13.9% |
| Net cash from operating activities | 118.2 | 31.1 | > +100% |
| Net cash (used in) investing activities | (45.0) | (100.8) | 55.4% |
| Net cash (used in)/from financing activities | (61.1) | 55.8 | > -100% |
| Net increase/(decrease) in cash and cash equivalents | 12.1 | (13.9) | > +100% |
| Effects of movements in foreign exchange rates on cash and cash equivalents | (5.5) | 0.1 | > -100% |
| Cash and cash equivalents at beginning of period | 93.4 | 82.6 | 13.1% |
| Cash and cash equivalents at end of period | 100.0 | 68.8 | 45.3% |
1 Investment represents purchases of property, plant and equipment and intangible assets, excluding goodwill.
Operating cash flow before changes in working capital rose to € 169.7 million in the first three quarters of 2020|21 (Q1-Q3 prior year: € 132.5 million) as a result partly of the higher profit for the period. After a significantly smaller increase of € 33.5 million in working capital than one year earlier (Q1-Q3 prior year: increase of € 85.6 million), net cash from operating activities improved to € 118.2 million (Q1-Q3 prior year: € 31.1 million). Net cash used in investing activities was € 45.0 million, reflecting significantly reduced payments for purchases of property, plant and equipment and intangibles (Q1-Q3 prior year: net cash use of € 100.8 million). This included the purchase price payment for the acquisition of the US company Marroquin Organic International, Inc., based in Santa Cruz, California, by AGRANA Stärke GmbH. Net cash used in financing activities amounted to approximately € 61.1 million and was driven above all by the dividend payment (Q1-Q3 prior year: net cash from financing activities of € 55.8 million, primarily reflecting the raising of a Schuldscheindarlehen, or bonded loan).
| €m, except % and pp | 30 November 2020 | 29 February 2020 | Change |
|---|---|---|---|
| Assets | |||
| Non-current assets | 1,279.0 | 1,331.9 | -4.0% |
| Of which intangible assets | 274.7 | 275.1 | -0.1% |
| Of which property, plant and equipment | 868.6 | 932.8 | -6.9% |
| Current assets | 1,248.1 | 1,217.5 | 2.5% |
| Of which inventories | 690.8 | 710.5 | -2.8% |
| Of which trade receivables | 372.8 | 319.5 | 16.7% |
| Of which cash and cash equivalents | 100.0 | 93.4 | 7.1% |
| Total Assets | 2,527.1 | 2,549.4 | -0.9% |
| Equity | 1,348.5 | 1,387.1 | -2.8% |
|---|---|---|---|
| Equity attributable to shareholders of the parent | 1,288.6 | 1,323.7 | -2.7% |
| Non-controlling interests | 59.9 | 63.4 | -5.5% |
| Non-current liabilities | 609.1 | 565.3 | 7.7% |
| Of which borrowings | 496.0 | 450.2 | 10.2% |
| Current liabilities | 569.5 | 597.0 | -4.6% |
| Of which borrowings | 76.1 | 126.8 | -40.0% |
| Of which trade payables | 325.5 | 311.8 | 4.4% |
| Total equity and liabilities | 2,527.1 | 2,549.4 | -0.9% |
| Net debt | 452.7 | 464.0 | -2.4% |
|---|---|---|---|
| Gearing ratio1 | 33.6% | 33.5% | 0.1pp |
| Equity ratio | 53.4% | 54.4% | -1.0pp |
1 Ratio of net debt to total equity.
Total assets were steady relative to the 2019|20 year-end balance sheet date, at € 2.53 billion as of 30 November 2020 (29 February 2020: € 2.55 billion), with an equity ratio of 53.4% (29 February 2020: 54.4%).
The value of non-current assets eased slightly, due especially to depreciation. Current assets rose slightly; while inventories were marginally reduced, trade receivables increased significantly. On the liabilities side of the balance sheet, non-current liabilities grew moderately. Current liabilities decreased, as a significant drop in short-term borrowings coincided with a small increase in trade payables.
Net debt at 30 November 2020 amounted to € 452.7 million, down € 11.3 million from the year-end level of 29 February 2020 (year-ago level of 30 November 2019: € 484.6 million). The gearing ratio was 33.6% at the quarterly balance sheet date (29 February 2020: 33.5%; 30 November 2019: 35.1%).
| Fruit segment €m, except % |
Q1-Q3 2020 21 |
Q1-Q3 2019 20 |
|---|---|---|
| Revenue | 891.7 | 889.3 |
| EBITDA1 | 73.4 | 77.5 |
| Operating profit before exceptional items and results of equity-accounted joint ventures |
42.1 | 45.9 |
| Exceptional items | (0.8) | 0.0 |
| Operating profit [EBIT] | 41.3 | 45.9 |
| EBIT margin | 4.6% | 5.2% |
| Fruit segment €m, except % |
Q3 2020 21 |
Q3 2019 20 |
|---|---|---|
| Revenue | 289.9 | 293.7 |
| EBITDA1 | 23.1 | 22.2 |
| Operating profit before exceptional items and results of equity-accounted joint ventures |
11.5 | 9.8 |
| Exceptional items | (0.3) | 0.0 |
| Operating profit [EBIT] | 11.2 | 9.8 |
| EBIT margin | 3.9% | 3.3% |
Fruit segment revenue in the first three quarters of 2020|21 was € 891.7 million, closely in line with the yearearlier level. In fruit preparations, revenue and sales volumes remained steady. Revenue in the fruit juice concentrate activities saw a moderate increase from a year ago, thanks largely to higher prices for the product group of fruit juice concentrates, albeit on the back of higher apple prices.
Fruit segment EBIT in the first nine months was € 41.3 million, off 10.0% from one year earlier. The causes of the deterioration lay in the fruit juice concentrate business, which saw reduced delivery volumes coupled with lower contribution margins of apple juice concentrate produced from the 2019 crop. Likewise, margins are under pressure in berry juice concentrates and apple juice concentrate made from the 2020 crop. The fruit preparations business, overcoming numerous challenges, significantly surpassed the EBIT of the year-earlier period. Earnings reductions in the Asia/Pacific and South America regions resulting from the coronavirus crisis were more than made up for by savings in administration and by improved results in Mexico and North America.
The market environment for fruit preparations is determined by consumer trends in the global markets especially for dairy products, ice-cream and bakery. The top trends continue to revolve around naturalness, sustainability, health, pleasure and convenience. The COVID-19 pandemic is having a profound impact on many of these consumer trends. For example, demand is growing for comfort foods – in other words, foods that convey a combined feeling of pleasure, security and nostalgia. Consumers are also focusing more on the health theme than before. Irrespective of this, the global recession is driving a demand trend towards lower-priced and simpler products.
The main market, that of fruit yoghurt, is being slightly negatively affected by the coronavirus pandemic. Current forecasts by Euromonitor call for a global growth rate for yoghurt of 1.8% in the 2020 calendar year; that is 0.5 percentage points less than the rate predicted before the outbreak of the COVID-19 crisis.
Demand for apple juice concentrate was solid in spring 2020 and was able to be met from the 2019 crop. The apple quantities available for the 2020 campaign were well below expectations; the associated higher raw material prices could only partially be passed through to the market. The demand situation was poor during the entire harvest and it can be assumed that large international customers in the beverage industry have only partly met their purchasing volume needs. Spring 2021 should therefore bring additional demand.
For most of the berry juice concentrate volume produced from the 2020 harvest, contracts were already concluded with customers. The market environment was extremely challenging, especially for cherry and raspberry, which led to margins below those of the previous year. As well, customers showed a general pattern of very defensive and hesitant purchasing.
Purchasing of fruits from the 2020 crop for processing in this financial year and next year was largely completed in the third quarter of 2020|21. Overall in the reporting period, about 304,000 tonnes of raw materials were procured for the fruit preparations activities.
The globally required amount of strawberry, the most important fruit by volume in this part of the Fruit segment, was contracted at slightly higher prices than in the year before. Driving the price increases were lower raw material quantities as a result of limited processing capacity in connection with the COVID-19 crisis in Morocco, Egypt and Spain and a reduced crop volume in Mexico. From August, strawberry planting for the next crop began in Mexico and the regions with a Mediterranean climate (for harvesting from November 2020 to January 2021). The crop acreage is expected to be expanded in Egypt and reduced in Morocco. Given the sustained strong demand from Europe and the USA for frozen fruit, prices for the coming crop year are likely to rise.
The raspberry harvest in Serbia, Poland and Ukraine produced below-average yields, with price increases of about 5% year-on-year. AGRANA was able to buy European blueberries at stable prices compared to the prior year, while the average price of Canadian blueberries was up significantly from the year before due to prolonged dry conditions in the summer and high demand from the fresh market.
Good crop yields of sour cherry in Poland, Serbia and Ukraine resulted in marked price reductions of up to 35% from a high year-earlier level.
In tropical fruits, a COVID-19-induced significant decline in supply of mango puree from India caused prices for this product to rise by as much as 12% from the prior year.
In the 2020 berry juice processing season in the fruit juice concentrate activities, red berry prices in particular and raw material prices overall were significantly higher than the year before.
The 2020 crop of apples, the most important fruit in the juice concentrate business, was significantly below expectations. Both in Hungary (due to the spring frost) and in Poland, the volumes available for industrial processing were only at the low level of the prior year. In China, apple receiving already started at the beginning of August 2020 and availability of the crop was satisfactory.
Share of Group revenue
| Starch segment €m, except % |
Q1-Q3 2020 21 |
Q1-Q3 2019 20 |
|---|---|---|
| Revenue | 620.8 | 606.9 |
| EBITDA1 | 76.3 | 72.0 |
| Operating profit before exceptional items and results of equity-accounted joint ventures |
41.6 | 46.1 |
| Share of results of equity-accounted joint ventures |
16.9 | 11.2 |
| Operating profit [EBIT] | 58.5 | 57.3 |
| EBIT margin | 9.4% | 9.4% |
| Starch segment €m, except % |
Q3 2020 21 |
Q3 2019 20 |
|---|---|---|
| Revenue | 213.6 | 199.1 |
| EBITDA1 | 28.3 | 27.7 |
| Operating profit before exceptional items and results of equity-accounted joint ventures |
16.5 | 19.0 |
| Share of results of equity-accounted joint ventures |
7.3 | 4.0 |
| Operating profit [EBIT] | 23.8 | 23.0 |
| EBIT margin | 11.1% | 11.6% |
The Starch segment's revenue in the first three quarters of 2020|21 was € 620.8 million, up slightly from one year earlier. Significant volume and revenue growth was achieved for wheat starch thanks to the capacity expansion in Pischelsdorf, Austria. At the same time, market
demand for almost all core products eased, leading to higher pressure on prices. Reflecting the impact of the COVID-19 pandemic, ethanol quotations were highly volatile. A drastic price slump in March 2020 in the course of the first lockdown was followed by a recovery in quotations during the second quarter of the financial year amid the renewed increase in private transport, culminating in an all-time high above € 800 per cubic metre in September; by December 2020, prices fell again to below € 500 per cubic metre. Revenue with by-products remained stable, with an increased proportion of products manufactured in-house.
At € 58.5 million, EBIT in the Starch segment was slightly above the year-earlier amount. The earnings increase was made possible by the high ethanol selling prices, particularly in the third quarter, while the margins of the other core products were down on reduced market demand. Savings in energy and material costs were positive for EBIT, while a significant increase in depreciation together with recently rising raw material prices for the new crops had a negative impact. The earnings contribution of the equity-accounted HUNGRANA group rose from € 11.2 million to € 16.9 million. In the Hungarian joint venture, the high ethanol prices were the key EBIT driver, and the currency effects from its euro-settled exports were also positive for earnings.
Since the financial second quarter of 2020|21, Marroquin Organic International Inc., based in Santa Cruz, California, USA, is fully consolidated in the Group accounts. This trading company specialising in organic products was acquired in March 2020.
The globe-spanning COVID-19 pandemic is also the most influential factor for the markets served by the Starch segment. Impacts of lockdowns and the accompanying global changes in consumer behaviour are evident in almost all markets.
The market for saccharification products is seeing high pressure on prices and volumes. A demand recovery after the standstill in the hotel and catering industry is not expected in the short term in view of renewed restrictions in the tourism and leisure sector and local lockdowns in Europe.
Native starches are marked by continuing heavy price and volume pressure.
In the area of non-food starches, customers reduced contract call-offs under blanket orders as many paper manufacturers – especially of graphic paper – cut their production levels.
The European fuel alcohol market saw consumption fall by more than 40% during the first lockdown. As a result, ethanol quotations came under severe pressure and marked an all-time low of € 350 per cubic metre (FOB Rotterdam). In spite of numerous cancellations and postponements of ethanol purchases by existing customers, volume losses in the overall Starch segment in the first quarter were largely offset by AGRANA's rapid maximisation of alcohol sales into the disinfection sector. After the subsequent loosening of COVID-19 restrictions and the resurgence of private transport from the summer months, ethanol demand also rose again significantly. The combination of the increase in required ethanol content of fuel blends in the EU under the Renewable Energy Directive and delayed ethanol imports exacerbated the shortage in Europe and pushed quotations to a historic high of over € 800 per cubic metre in August. Since the autumn, with renewed restrictions on mobility, ethanol prices fell significantly again (to below € 500 per cubic metre in December 2020); a recovery in the coming winter months appears unlikely.
World grain production in the 2020|21 grain marketing year (July to June) is estimated by the International Grains Council in its forecast of 26 November 2020 at 2.22 billion tonnes, which is about 33 million tonnes more than in the prior year and falls short of expected consumption by around 2 million tonnes. Wheat production is forecast at 765 million tonnes (prior year: 763 million tonnes; estimated 2020|21 consumption: 752 million tonnes) and the projected production of corn (maize) is 1,146 million tonnes (prior year: 1,124 million tonnes; estimated 2020|21 consumption: 1,169 million tonnes). Total grain stocks at the end of the 2020|21 grain marketing year are to ease by approximately 2 million tonnes to a new balance of 616 million tonnes.
Grain production in the EU-27 and the United Kingdom is estimated by Stratégie Grains at about 296 million tonnes (prior year: 312 million tonnes). Of this total, the soft wheat harvest is to account for about 129 million tonnes, significantly less than the 2019 crop of 147 million tonnes. The 2020 corn harvest in the EU and UK is expected to reach 62 million tonnes (prior year: 65 million tonnes).
The quotations on the NYSE Euronext Liffe commodity derivatives exchange in Paris showed a rising trend since September of this financial year and, on 30 November 2020, were around € 194 per tonne for corn (year earlier: € 166) and € 210 per tonne for wheat (year earlier: € 186).
On 20 August the potato starch factory in Gmünd, Austria, began the processing of starch potatoes from the 2020 harvest. Thanks to the favourable weather conditions during the growing season, contract fulfilment by the growers is expected to reach 105% to 110% of the contracted amount of starch potatoes. The average starch content is projected at about 18.1% (prior year: 18.4%).
The receiving of freshly harvested wet corn at the corn starch plant in Aschach, Austria, began at the start of September and wet corn processing was completed in early December with a processed volume of about 150,000 tonnes (prior year: 130,000 tonnes). In total at the Aschach site, approximately 466,000 tonnes of raw materials are to be processed by the end of the financial year (prior year: 461,000 tonnes).
In the integrated biorefinery1 in Pischelsdorf, Austria, about 95,000 tonnes of wet corn was processed from the beginning of September to the beginning of December (prior year: about 105,000 tonnes). For this financial year as a whole, the total processing volume of wheat, organic wheat, triticale and corn at the facility is expected to reach about 1 million tonnes (prior year: 881,000 tonnes).
The raw material supply for the Austrian sites for the 2020|21 financial year is almost fully secured.
The wet corn campaign at the equity-accounted plant in Hungary (HUNGRANA) began at the end of August and concluded at the beginning of December. Wet corn processing volume at this facility was approximately 265,000 tonnes this year (prior year: 250,000 tonnes; quantities given for this joint venture represent the totals rather than AGRANA's proportion of ownership). In total, HUNGRANA will process about 1.03 million tonnes of corn in 2020|21 (prior year: 1.02 million tonnes).
Share of Group revenue
| Sugar segment €m, except % |
Q1-Q3 2020 21 |
Q1-Q3 2019 20 |
|---|---|---|
| Revenue | 452.8 | 383.2 |
| EBITDA1 | 9.7 | (10.0) |
| Operating loss before exceptional items and results of equity-accounted joint ventures |
(13.8) | (33.7) |
| Share of results of equity-accounted joint ventures |
(1.7) | 0.7 |
| Exceptional items | 0.0 | (0.4) |
| Operating loss [EBIT] | (15.5) | (33.4) |
| EBIT margin | (3.4%) | (8.7%) |
| Sugar segment €m, except % |
Q3 2020 21 |
Q3 2019 20 |
|---|---|---|
| Revenue | 152.5 | 136.6 |
| EBITDA1 | 6.9 | (1.2) |
| Operating loss before exceptional items and results of equity-accounted joint ventures |
(5.5) | (14.5) |
| Share of results of equity-accounted joint ventures |
(1.0) | 0.2 |
| Exceptional items | 0.0 | (0.4) |
| Operating loss [EBIT] | (6.5) | (14.7) |
| EBIT margin | (4.3%) | (10.8%) |
The Sugar segment's revenue in the first three quarters of 2020|21, at € 452.8 million, was up significantly from one year earlier. This growth was attributable both to higher sugar selling prices and increased sugar sales volumes, especially with resellers.
Although EBIT in the first nine months of 2020|21 was still negative at a deficit of € 15.5 million, it improved markedly compared to the same period of the previous year due to a more benign sales price environment.
As a result of the blow to confidence dealt by the COVID-19 pandemic (with an uncertain consumption outlook), and following the historic drop in oil prices early in the year, world market sugar quotations moved in parallel with oil prices and (although volatility increased) remained at low absolute levels during the reporting period. Thus, in April 2020, a new twelve-year low was reached for raw sugar, at US\$ 203.05 per tonne.
The unappealing prices in the world energy market, combined with a weakening Brazilian real, prompted producers in Brazil to maximise the production of sugar relative to ethanol. This increase in sugar production helped compensate for the effect of poor sugar cane harvests especially in India and Thailand, thus reducing the world sugar deficit in the 2019|20 sugar marketing year (SMY).
Towards the end of the reporting period, prices trended upwards despite a second wave of COVID-19 and the expectation of high Indian and Brazilian sugar production in SMY 2020|21. At the end of November 2020, white sugar quoted at US\$ 398.80 per tonne and raw sugar at US\$ 319.89.
1 EBITDA represents operating profit before exceptional items, results of equity-accounted joint ventures, and operating depreciation and amortisation.
According to estimates by the European Commission, EU sugar production in SMY 2020|21 is expected to fall short of the already low prior-year level. Given the COVID-19 restrictions, a decrease in consumption is projected both for human nutrition and for industrial use.
Since the abolition of the sugar quotas at the end of September 2017, the average sugar prices under the EU price reporting system have declined significantly. By January 2019 the price was only € 312 per tonne. In the 2019 calendar year the price of sugar in the EU recovered steadily, and a price of € 381 per tonne was reported in October 2020.
As a result of the low production volumes in SMY 2019|20, export quantities were again exceeded by imports and the EU thus remained a net importer. A similar trend is expected for SMY 2020|21, leaving the EU a net importer of sugar for the third consecutive sugar marketing year.
The first three quarters of 2020|21 brought an overall increase in volume and prices for AGRANA's sugar sales. Notably in the reseller sector (particularly in the summer months), the demand situation was very good in the Central and Eastern European markets, generating much of the volume growth in the Sugar segment. Since the new SMY 2020|21, the new contracts with customers largely have higher prices. However, the COVID-19 pandemic continues to be a major risk factor for the trajectories of volumes and prices going forward.
The area contracted by AGRANA with its growers for sugar beet production in the 2020 crop year was about 85,900 hectares.
Generally speaking, beet planting occurred early. Juvenile development was greatly retarded in all growing regions in April and May 2020 by a lack of rainfall. From the middle of April, severe damage was caused in the Austrian core beet production areas by insect pests, including the beet weevil and the beet flea beetle. To combat and contain the further spread of the beet weevil, a variety of measures were taken, such as the use of obstacle furrow ploughs, the placing of more than 180,000 pheromone traps, and insecticide application. While the damage sustained could not be prevented, very valuable advance work was done for controlling the establishment of a new population of weevils with a view to beet production in 2021. In total, about 12,000 hectares of beet had to be turned under as a result of adverse weather and animal pests, only one-third of which was replanted. Ultimately, the area under beet available for harvest in 2020 was about 76,600 hectares.
From the end of May 2020, enough precipitation was recorded in the entire production area in all regions, leading to good beet yields in terms of tonnes per hectare when the crop was lifted. On the other hand, the sugar content of the beet was below average as a result of the dry-weather-driven late start of growth in the spring, the consistently high precipitation from June on and the lower-than-average hours of sun received in 2020.
The beet campaign at the seven beet sugar factories began between 11 September and 8 October 2020 and will be completed by the second half of January at all plants. The total beet harvest volume will reach approximately 4.9 million tonnes.
At the raw sugar refineries in Bosnia and Herzegovina and in Romania, 128,000 tonnes of raw cane sugar were already processed in this financial year to date.
As planned, the molasses desugarisation facility in Tulln, Austria, produced liquid betaine in the reporting period, which since August 2020 has found additional use as a raw material in the new betaine crystallisation plant.
On 27 November 2020, the Supervisory Board of AGRANA Beteiligungs-AG approved the continuing operation of the sugar factory at the Leopoldsdorf, Austria, site, as the stipulated requirement of securing at least 38,000 hectares of beet planting area in Austria for the 2021 campaign was met by November 2020.
AGRANA uses an integrated system for the early identification and monitoring of risks that are relevant to the Group.
There are currently no known risks to the AGRANA Group's ability to continue as a going concern and no future risks of this nature are discernible at present.
A detailed description of the Group's business risks, including risks related to COVID-19, is provided on pages 91 to 97 of AGRANA's annual report 2019|20.
| Full-time equivalents |
Q1-Q3 2020 21 |
Q1-Q3 2019 20 |
Change |
|---|---|---|---|
| Fruit segment | 5,900 | 6,406 | -7.9% |
| Starch segment | 1,150 | 1,082 | 6.3% |
| Sugar segment | 2,008 | 2,055 | -2.3% |
| Group | 9,058 | 9,543 | -5.1% |
In the first three quarters of 2020|21 the AGRANA Group employed an average of 9,058 full-time equivalents (Q1- Q3 prior year: 9,543). The decrease in personnel was due primarily to a reduced need for seasonal workers in the fruit preparations business.
No significant events occurred after the interim balance sheet date of 30 November 2020 that had a material effect on AGRANA's financial position, results of operations or cash flows.
| AGRANA Group €m |
2019 20 Actual |
2020 21 Forecast including covid-19 |
|---|---|---|
| effects | ||
| Revenue | 2,480.7 | ä |
| EBIT | 87.1 | |
| Investment1 | 149.7 | 76 |
ä Slight increase 2
Steady2
AGRANA expects Group EBIT for the full 2020|21 financial year to at least match the prior-year level. Group revenue is projected to show slight growth.
Due to the ongoing COVID-19 pandemic and the associated high volatility in all business segments, the forecast for the full year remains subject to very high uncertainty.
This outlook INCLUDING COVID-19 EFFECTS is supplemented on page 14 by an assessment of COVID-19 risk factors that could affect the Group forecast.
| Fruit segment | 2019 20 | 2020 21 |
|---|---|---|
| €m | Actual | Forecast |
| including | ||
| covid-19 | ||
| effects | ||
| Revenue | 1,185.4 | ä |
| EBIT | 55.9 | |
| Investment1 | 56.5 | 34 |
ä Slight increase 2
Moderate reduction2
In the Fruit segment, AGRANA expects the full 2020|21 financial year to bring slight growth in revenue, with an EBIT result below the prior-year level. The fruit preparations business is projecting stable revenue, which despite negative COVID-19 effects is expected to be achieved through the full utilisation of the capacity already created. EBIT is to be raised through higher margins, which are to be realised partly via smaller cost increases than in 2019|20. In the fruit juice concentrate business, an increase in revenue is expected for the full financial year, but its earnings situation will deteriorate significantly due to lower margins in fruit juice concentrates proper and volume reductions in beverage bases.
1 Investment represents purchases of property, plant and equipment and intangible assets, excluding goodwill.
2 For definitions of these quantitative terms as used here in the "Outlook" section, see page 15.
| Starch segment | 2019 20 | 2020 21 |
|---|---|---|
| €m | Actual | Forecast |
| including | ||
| covid-19 | ||
| effects | ||
| Revenue | 807.0 | ä |
| EBIT | 75.2 | |
| Investment1 | 73.6 | 23 |
ä Slight increase2
Moderate reduction2
For the Starch segment, slight growth in revenue is forecast for the 2020|21 financial year. Sales prices for native starches and wheat gluten are expected to be reduced as a result of increased supply on the European market. For starch-based saccharification products, no major recovery in prices can be expected, owing to the persistent challenging market environment. Consistently positive impetus for growth is anticipated in organic and GMO-free products. Starch segment EBIT is projected to decrease moderately as a consequence of foreseeable margin reductions resulting from lower selling prices. The business performance in the Starch segment will also depend on the further trendline of ethanol prices.
| Sugar segment | 2019 20 | 2020 21 |
|---|---|---|
| €m | Actual | Forecast |
| including | ||
| covid-19 | ||
| effects | ||
| Revenue | 488.3 | |
| EBIT | (44.0) | |
| Investment1 | 19.6 | 19 |
Significant increase2
Significant improvement2
In the Sugar segment, AGRANA expects a continual improvement in conditions in the EU sugar market. As a result of the coronavirus pandemic, there has been a shift in consumption from industrial to more reseller demand. On the sales side, sugar prices rose overall. While idle-capacity costs mean that the Sugar segment's EBIT in absolute terms will still be negative, the positive trend in the EU sugar market environment, combined with rigorous cost management, leads to the expectation of a significant improvement in EBIT.
The continuing impacts of the COVID-19 pandemic (specifically, its second wave) make for very high uncertainty in the outlook.
Especially in the Fruit segment with its global production operations (41 sites in 21 countries), the forecast is subject to substantial uncertainties, including with regard to the short- and medium-term demand situation in many regions of the world.
Bioethanol is a major core product in the Starch segment. Restrictions on business activity and on mobility may have a renewed negative impact on prices in the European ethanol markets.
The sales volume gains and revenue growth in the Sugar segment in the 2020|21 financial year to date were encouraging, especially in the first quarter due to the pulling-forward of sugar purchases by many consumers at the start of the COVID-19 pandemic. It remains to be seen how the demand situation will unfold over the coming months, especially in the industrial sector.
Total investment across the three business segments in this financial year, at approximately € 76 million, is to be significantly below both the 2019|20 capital expenditure level (of about € 150 million) and this year's budgeted depreciation of just under € 120 million.
1 Investment represents purchases of property, plant and equipment and intangible assets, excluding goodwill.
2 For definitions of these quantitative terms as used here in the "Outlook" section, see page 15.
| 11 May 2021 | Results for full year 2020 21 (annual results press conference) |
|
|---|---|---|
| 19 June 2021 | Record date for Annual General Meeting participation |
|
| 29 June 2021 | Annual General Meeting in respect of 2020 21 | |
| 2 July 2021 | Ex-dividend date | |
| 5 July 2021 | Record date for dividend | |
| 6 July 2021 | Dividend payment date | |
| 8 July 2021 | Results for first quarter of 2021 22 | |
| 14 October 2021 | Results for first half of 2021 22 | |
| 13 January 2022 | Results for first three quarters of 2021 22 |
Friedrich-Wilhelm-Raiffeisen-Platz 1 1020 Vienna, Austria www.agrana.com
Hannes HAIDER Phone: +43-1-211 37-12905 Fax: +43-1-211 37-12926 E-mail: [email protected]
Corporate Communications/Public Relations Markus SIMAK
Phone: +43-1-211 37-12084 Fax: +43-1-211 37-12926 E-mail: [email protected]
Published 14 January 2021 by: AGRANA Beteiligungs-AG Friedrich-Wilhelm-Raiffeisen-Platz 1 1020 Vienna, Austria
AGRANA 2019|20 Online: reports.agrana.com/en
This interim statement contains forward-looking statements, which are based on assumptions and estimates made by the Management Board of AGRANA Beteiligungs-AG. Although these assumptions, plans and projections represent the Management Board's current intentions and best knowledge, a large number of internal and external factors may cause actual future developments and results to differ materially from these assumptions and estimates. Some examples of such factors are, without limitation: negotiations concerning world trade agreements; changes in the overall economic environment, especially in macroeconomic variables such as exchange rates, inflation and interest rates; EU sugar policy; consumer behaviour; and public policy related to food and energy. AGRANA Beteiligungs-AG does not guarantee in any way that the actual future developments and actual future results achieved will match the assumptions and estimates expressed or made in this interim statement, and does not accept any liability in the event that assumptions and estimates prove to be incorrect.
| Modifier | Visualisation | Numerical rate of change |
|---|---|---|
| Steady | | 0% up to +1%, or 0% up to -1% |
| Slight(ly) | ä or | More than +1% and up to +5%, or more than -1% and up to -5% |
| Moderate(ly) | or | More than +5% and up to +10%, or more than -5% and up to -10% |
| Significant(ly) | or | More than +10% and up to +50%, or more than -10% and up to -50% |
| Very significant(ly) | or | More than +50% or more than -50% |
This interim statement has not been audited or reviewed. It was prepared by the Management Board of AGRANA Beteiligungs-AG on 30 December 2020.
For financial performance indicators not defined in a footnote, please see the definitions on page 204 of the annual report 2019|20.
In the interest of readability, this document may occasionally use language that is not gender-neutral. Any gender-specific references should be understood to include masculine, feminine and neuter as the context permits.
As a result of the standard round-half-up convention used in rounding individual amounts and percentages, this interim statement may contain minor, immaterial rounding errors.
No liability is assumed for misprints, typographical and similar errors.
This English translation of the interim statement is solely for readers' convenience and is not definitive. In the event of discrepancy or dispute, only the German version shall govern.
AGRANA Beteiligungs-AG | First three quarters of 2020|21
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