Interim / Quarterly Report • Oct 13, 2011
Interim / Quarterly Report
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REPOR THE FI 2011/ RT ON RST HALF OF /2012
1 Debt-equity gearing (ratio of net debt to total equity).
| Key fi nancials | H1 | H1 |
|---|---|---|
| AGRANA Group | 2011 12 | 2010 11 |
| Revenue | € 1,284.7m | € 1,073.3m |
| EBITDA | € 152.2m | € 100.2m |
| Operating profi t before | ||
| exceptional items | € 118.2m | € 64.8m |
| Operating margin | 9.2% | 6.0% |
| Exceptional items | (€ 1.5m) | € 0.0m |
| Operating profi t after | ||
| exceptional items | € 116.7m | € 64.8m |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 35.5m | € 19.1m |
| Staff count | 8,177 | 8,798 |
Revenue of the AGRANA Group increased by € 211.4 million or 19.7% in the fi rst half of the 2011|12 fi nancial year (1 March to 31 August 2011) to € 1,284.7 million (H1 2010|11: € 1,073.3 million). The revenue growth in all three segments refl ected the positive market trends for all products, which on balance outweighed the eff ect of slightly lower sales volumes in the Sugar and Fruit segments.
In the fi rst six months of 2011|12, operating profi t before exceptional items was € 118.2 million, up 82.4% (€ 53.4 million) from the year-earlier level of € 64.8 million. This superb earnings growth was carried by all three segments, Sugar, Starch and Fruit. It refl ects both the rewards of the optimization measures taken in the previous years and especially the good market conditions in the sugar, starch and fruit juice concentrate businesses during the fi rst half of this fi nancial year. As a result of the unwinding of the Chinese fruit juice concentrate joint ventures between AGRANA and Yantai North Andre (also see the notes to the accompanying fi nancial statements for information on changes in the scope of consolidation), an exceptional items expense of about € 1.5 million was recorded. Net fi nancial items in the fi rst half of 2011|12 amounted to an expense of € 17.9 million (H1 2010|11: net expense of € 16.0 million); the year-on-year change was attributable to a marginally greater net interest expense and a decrease in other fi nancial items. After an income tax expense of € 21.2 million, based on a tax rate of 21.4% (H1 2010|11: 23.4%), the AGRANA Group's profi t for the period was € 77.7 million (H1 2010|11: € 37.4 million). Earnings per share attributable to AGRANA shareholders grew from € 2.57 to € 5.36.
In the fi rst half of 2011|12, a total of € 35.5 million was invested in purchases of property, plant and equipment and intangibles (H1 2010|11: € 19.1 million). The Sugar seg-
ment's € 11.8 million share of this (compared with € 8.2 million in H1 2010|11) was primarily for the construction of the 70,000 tonne capacity sugar silo in Tulln, Austria. The installation of an additional beet pulp press in Opava in the Czech Republic and upgrading of the centrifuge control system at the sugar plant in Sered, Slovakia, were completed in time before the beet campaign. The construction of a third fermenter for the biogas plant in Kaposvár, Hungary, is on schedule and its commissioning is planned to occur during the 2011|12 campaign. AGRANA invested € 7.6 million in the Starch segment (H1 2010|11: € 2.9 million), primarily in Szabadegyháza, Hungary, for the implementation of the biomass boiler and the expansion of corn processing capacity, as well as for an increase in evaporator capacity at the Austrian bioethanol plant. Approximately € 16.0 million (H1 2010|11: € 8.0 million) was invested in the Fruit segment. The new warehouse for fi nished product in Serpuchov, Russia, was completed and began operation in June 2011; an addition for the planned capacity expansion is currently in progress. In China in August 2011, construction began of the new fruit preparations plant in Dachang (in the course of the relocation of production). A sizeable investment was also made in the purchase of stainless steel containers for transporting fruit preparations. In the concentrate activities, investment focused especially on the optimizing of operations in Poland and Hungary.
First-half operating cash fl ow before change in working capital increased by 55.2% year-on-year to € 119.5 million (H1 2010|11: € 77.0 million), in step with the rise in operating profi tability. With the increase (driven by raw material prices) of € 10.8 million in working capital in the fi rst six months (H1 2010|11: reduction of € 46.0 million), net cash from operating activities amounted to € 107.7 million (H1 2010|11: € 122.9 million). Net cash used in investing activities was € 34.8 million (H1 2010|11: net cash used of € 14.5 million) on higher outfl ows for investment in property, plant and equipment and intangibles. Refl ecting a net reduction in borrowings, net cash used in fi nancing activities eased to € 64.7 million (H1 2010|11: net cash used of € 92.7 million).
Total assets were almost unchanged from the prior yearend level of 28 February 2011, while the equity ratio rose from 48.7% to 50.6%. Current assets eased despite an increase in trade receivables, as a result largely of the campaign-induced inventory contraction in the summer months. Non-current liabilities declined as a result of reduced long-term borrowings. The biggest change in current liabilities occurred in trade and other payables, which decreased as a consequence of the payments to beet growers and the production levy. Net debt at 31 August
04 2011 stood at € 352.2 million, down € 30.2 million from the 2010|11 fi nancial year-end level of € 382.4 million. The gearing ratio of 35.1% at 31 August 2011 was well below the level of 28 February 2011 (39.4%).
| Share data | H1 |
|---|---|
| 2011 12 | |
| High (5 July 2011) | € 86.43 |
| Low (11 May 2011) | € 74.97 |
| Closing price (31 August 2011 | € 84.24 |
| Closing book value per share (31 August 2011) | € 68.49 |
| Closing market capitalisation (31 August 2011) | € 1,196.4m |
AGRANA started the 2011|12 fi nancial year at a share price of € 80.00. With an average trading volume of slightly more than 2,400 shares per day (based on double counting, as published by the Vienna Stock Exchange), the share price increased to more than € 86 in the period after the ad-hoc announcement on 22 June 2011 of an increase in the forecast for the full 2011|12 fi nancial year. At the beginning of August the debt crisis in Europe and the United States caused stock markets around the world to plummet. AGRANA's share price initially could not escape this broad downward movement and temporarily fell as low as under € 77. The share price subsequently regained buoyancy in this volatile equity market environment and rose back to € 84.24 by the end of the fi nancial fi rst half-year. From 1 March to 31 August 2011, AGRANA thus gained 5.30% while the Austrian blue-chip ATX index fell by 21.07% over the same period.
The market capitalisation at 31 August 2011 was € 1,196.4 million, with an unchanged 14,202,040 shares outstanding. The share price performance can be followed in the investor relations section of the AGRANA homepage at www.agrana.com.
Since 1 September 2011 the Vienna Stock Exchange calculates and publishes four new sector indices that are designed as tradable indices and used as underlyings for structured products and standardised derivatives. AGRANA is quoted in the ATX Consumer Products & Services Index (ATX CPS), which is also intended as a representative benchmark for investors. Since its inception (on 30 December 2009 at 1,000 index points) the ATX CPS rose by 85.5%, strongly outperforming all three other new sector indices (ATX Basic Industries: +6.6%, ATX Financials: –6.5%, ATX Industrial Goods & Services: +20.9%) and clearly beating the ATX Prime (–4.8%).
The 2011 calendar year has seen strong swings in sugar prices on the world market. The reason lies in recurring news reports of unfavourable weather conditions in Brazil, which have led to continual downward adjustments in sugar cane yield forecasts and consequently to greater uncertainty in the markets. In Thailand, India and Russia, on the other hand, all the signs are that harvest volumes will be greater than originally forecast.
In the fi rst nine months of the 2011 calendar year, world market prices for sugar showed heightened volatility. From USD 645 or € 467 per tonne at the start of the fi nancial year on 1 March 2011, raw sugar fi rst fell to USD 451 or € 311 per tonne by May 6, then recovered to USD 654 or € 453 per tonne as of the end of the reporting period. White sugar at the beginning of the fi nancial year quoted at around USD 733 or € 532 per tonne, declined to an interim low on 6 May (USD 582 or € 401 per tonne) and rallied by 31 August 2011 to USD 771 or € 533 per tonne.
To ensure security of supply for the EU quota sugar market, the European Commission implemented several measures from spring 2011 onwards. These included the temporary suspension of the preferential import duties; the one-off duty-free importation of 500,000 tonnes of sugar; a standing invitation to tender for imports at reduced tariff s; and the opportunity to sell 500,000 tonnes of non-quota sugar into the quota sugar market. For the 2011|12 sugar marketing year it is not yet known which of these measures will be repeated by the European Commission in the event that imports from LDCs and ACP countries again fall short of expectations.
According to the most recent forecasts (F. O. Licht), sugar production in Europe will grow to 30.1 million tonnes in the 2011|12 sugar marketing year thanks to more favourable weather. Total production in the EU countries is forecast at 17.4 million tonnes of sugar, an increase of 2.4 million tonnes from the year before. This sugar production raises the availability of non-quota sugar for the chemical, pharmaceutical and fermentation industries in the EU, as well as for exports from the EU. Further, like in the 2010|11 sugar marketing year, part of this quantity could be used to supply the quota sugar market if the Commission decides to release non-quota sugar for sale into the EU food market.
| Key fi nancials | H1 | H1 |
|---|---|---|
| Sugar segment | 2011 12 | |
| Revenue | € 435.9m | € 366.2m |
| EBITDA | € 55.7m | € 17.5m |
| Operating profi t before | ||
| exceptional items | € 50.6m | € 12.3m |
| Operating margin | 11.6% | 3.4% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 11.8m | € 8.2m |
| Key fi nancials | Q2 | Q2 |
|---|---|---|
| Sugar segment | 2011 12 | 2010 11 |
| Revenue | € 253.9m | € 185.0m |
| EBITDA | € 31.6m | € 8.7m |
| Operating profi t before | ||
| exceptional items | € 29.0m | € 6.2m |
| Operating margin | 11.4% | 3.4% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 7.7m | € 4.5m |
Sugar segment revenue increased by 19.0% in the fi rst half of 2010|11 to € 435.9 million. Compared to the year-earlier period, steady quota sugar sales were achieved both with resellers and the sugar-using industry. In view of the general challenging supply situation, this was accomplished only through timely buying-in and imports. The signifi cant rise in world market prices and a tight sugar supply in the EU led to higher sugar prices in all sales segments, particularly in Eastern Europe. Despite the diffi cult conditions, AGRANA was able to meet all existing commitments to customers for volumes and prices. The supply shortage – especially in Hungary, as one of the defi cit markets where demand could no longer be adequately met with spot quantities – stimulated additional interest from customers in medium- and long-term contracts with AGRANA. Exports of non-quota sugar to countries outside the EU fell substantially as a result of the reduced volumes of sugar available compared with the prior-year period.
The Sugar segment's operating profi t of € 50.6 million before exceptional items (H1 2010|11: € 12.3 million) was dramatically improved. Notable contributing factors were timely sugar sourcing, vigorous marketing and the fl exibility to seize opportunities created by changing market conditions, such as the additional scope for importation and the sales of non-quota sugar on the EU food market upon approval by the European Commission. The rise in the world market price and the dependence on the world market created by the EU's sugar policy sharply drove up prices in the EU.
The amount of area planted to sugar beet for the AGRANA Group was further expanded by about 5,000 hectares for the 2011|12 sugar marketing year to more than 91,000 hectares. In Austria about 900 hectares was reserved for organic production. In light of the weather conditions, good to very good beet yields are expected in all countries. Harvest operations in all countries began in early September, with the exception of Romania, where the campaign did not get underway until 22 September 2011.
The International Grains Council (IGC) is estimating the world's grain production in the 2011|12 marketing year at 1.81 billion tonnes (2010|11: 1.75 billion tonnes), an amount marginally lower than the forecast consumption of 1.82 billion tonnes. For wheat, production is forecast at 677 million tonnes (2010|11: 651 million tonnes), and the prediction for corn (maize) is 849 million tonnes (2010|11: 824 million tonnes). Worldwide consumption is estimated at 678 million tonnes for wheat and 858 million tonnes for corn. While supply and demand are thus in balance for wheat, global corn inventories are expected to decline further amid the likely undersupply. Commodity prices for wheat and corn in the past weeks have been gently easing at a high absolute level. Thus, at the end of August 2011 on the Euronext Liff e commodity derivatives exchange in Paris, wheat futures for November delivery quoted at about € 211 per tonne and corn futures at around € 215 per tonne.
The Austrian grain harvest, including grain corn (nonsilage corn), is estimated by Agrarmarkt Austria (AMA) at more than 5 million tonnes, an increase from the prior year's 4.7 million tonnes. Especially wheat production is projected to be 5% to 10% higher than last year's.
| Key fi nancials | H1 | H1 |
|---|---|---|
| Starch segment | 2011 12 | 2010 11 |
| Revenue | € 387.7m | € 272.6m |
| EBITDA | € 49.0m | € 43.4m |
| Operating profi t before | ||
| exceptional items | € 36.2m | € 30.8m |
| Operating margin | 9.3% | 11.3% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 7.7m | € 2.9m |
| 06 | Key fi nancials | Q2 | Q2 |
|---|---|---|---|
| Starch segment | 2011 12 | 2010 11 | |
| Revenue | € 194.4m | € 137.2m | |
| EBITDA | € 20.0m | € 21.9m | |
| Operating profi t before | |||
| exceptional items | € 13.7m | € 15.5m | |
| Operating margin | 7.0% | 11.3% | |
| Purchases of property, plant | |||
| and equipment and intangibles1 | € 5.4m | € 2.1m |
The revenue growth of 42.2% in the fi rst half of 2011|12 from € 272.6 million to € 387.7 million was propelled mostly by higher sales prices in all major groups of core and by-products. The prior year's performance was also narrowly surpassed in volume terms, thanks in particular to higher sales of isoglucose, bioethanol and by-products.
Selling prices and quantities for bioethanol were up from a year ago. As well, the restricted physical supply in the sugar market had the eff ect of boosting sales of starch saccharifi cation products.
The Starch segment's operating profi t of € 36.2 million before exceptional items improved by € 5.4 million on the prior-year result of € 30.8 million. The higher sales prices for all core products made up for the increase in raw material prices and were the key to the EBIT growth.
On 25 August 2011 the potato starch factory in Gmünd, Austria, began the processing of starch potatoes from the 2011 harvest. After the favourable weather during the key growing season in the form of frequent rains in June and July, a harvest of about 220,000 tonnes (including organic starch potatoes) is anticipated.
Processing of wet corn at the corn starch plant in Aschach, Austria, began on 5 September 2011. The wet corn quantity is expected to be at the prior-year level of more than 100,000 tonnes and processing should run until the beginning of December 2011. Production will then switch to the use of dry corn. In the fi rst half of 2011|12, some 201,000 tonnes of corn was processed (H1 2010|11: 191,000 tonnes).
At Hungarian subsidiary HUNGRANA, the wet corn campaign began on 25 August 2011. The projection is for a wet corn volume of approximately 200,000 tonnes. In the fi rst half of 2011|12 the processing volume of approximately 526,000 tonnes of corn (with AGRANA's share being 50%) was at the prior-year level. HUNGRANA has an isoglucose quota of about 220,000 tonnes.
In Romania, about 17,000 tonnes of corn were processed in the fi rst six months of 2011|12 (H1 2010|11: 15,000 tonnes), an increase of more than 10% year-on-year. Since early September 2011, freshly harvested wet corn is used.
As feedstock for bioethanol production in the fi rst half of 2011|12, AGRANA used approximately equal proportions of wheat and corn. Total processing volume for the fi rst six months of the fi nancial year was about 270,000 tonnes (H1 2010|11: 252,000 tonnes). For the 2012 crop, farmers are again being off ered cultivation contracts for ethanol grains. The processing of wet corn began in the middle of September and will reach a total quantity approximately at the prior-year level (60,000 tonnes).
The long-term growth potential is intact, although the global fruit yoghurt market was fl at in the fi rst nine months of the 2011 calendar year. The macroeconomic environment recently aff ected consumer behaviour, which showed a greater trend towards purchases of lower-priced products and, in some countries, towards consumption of yoghurts without fruit content. The eff ect is amplifi ed by cost-saving measures of customers in the dairy industry in response to cost increases for milk, energy and packaging. In comparison to the previous year, advertising spend and promotional activities were signifi cantly reduced. All markets worldwide showed stagnation. In developed markets with already high per-capita consumption, such as Western and Central Europe, market demand declined by 2% to 4%. In the emerging markets of Eastern Europe, Asia and Latin America, the growth rates for fruit yoghurt fell by half, to levels of recently only about 3% to 4%. In this stagnating market setting, competitive pressure rose considerably.
In the fruit juice concentrates business, during the reporting period, the market showed steady beverage sales volumes in Western Europe and single-digit growth rates in Eastern Europe. Sales quantities in these regions are predicted to remain stable. Similarly, the trend in apple juice concentrate volumes sold in North America was satisfactory.
| Key fi nancials | H1 | H1 |
|---|---|---|
| Fruit segment | 2011 12 | 2010 11 |
| Revenue | € 461.1m | € 434.5m |
| EBITDA | € 47.4m | € 39.3m |
| Operating profi t before | ||
| exceptional items | € 31.4m | € 21.7m |
| Operating margin | 6.8% | 5.0% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 16.0m | € 8.0m |
| Key fi nancials | Q2 | Q2 |
|---|---|---|
| Fruit segment | 2011 12 | 2010 11 |
| Revenue | € 223.6m | € 210.6m |
| EBITDA | € 22.1m | € 17.7m |
| Operating profi t before | ||
| exceptional items | € 13.8m | € 8.9m |
| Operating margin | 6.2% | 4.2% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 8.2m | € 4.9m |
Fruit segment revenue increased by 6.1% in the fi rst half of 2011|12 to € 461.1 million. In a diffi cult market environment, sales volumes of fruit preparations edged somewhat lower from the year-earlier period. The chief causes were the market entry of a competitor in Russia and small volume losses due to raised prices. Growth in market shares was achieved in the USA and Germany; through price increases in all markets relative to the prior year, the reduction in volumes was largely off set. The joint venture in Egypt, AGRANA Nile Fruits Processing (SAE), began operation at the end of May 2011. The sales prices for fruit juice concentrates in the fi rst half of the year were stable at a high absolute level, with a mild decline in volumes sold.
The operating profi t of € 31.4 million before exceptional items was higher than one year earlier (H1 2010|11: € 21.7 million). While in fruit juice concentrates an attractive margin trend was witnessed (especially in the apple juice concentrate business), a combination of lower sales quan tities and higher raw material prices that could not be fully recouped through revenue increases led to slightly lower profi tability in fruit preparations. Overall, however, the operating margin in the Fruit segment expanded to 6.8% (H1 2010|11: 5.0%).
In the regions with spring and summer harvests, such as North America, Europe and parts of China, prices for nearly
07 Business performance all fruits went up enormously. The requirement for frozen fruit could not be sourced at similarly good prices as in the prior year, owing to unfavourable weather conditions and the strong demand from both the fresh market and the canning industry. The high demand at the beginning of the year in Morocco (particularly in the fresh markets) continued in Poland, Serbia, Spain and Greece, with particularly notable price increases of up to 50% for strawberry, cherry and blueberry.
A very similar situation unfolded in North and South America, where current fruit prices have reached a comparably high level as in Europe. The segment of tropical fruits exhibited signifi cantly higher price trends than just a year ago, especially in emerging markets.
In the apple juice concentrate market, crop forecasts in China are in line with the relatively low level of the prior year, and the price of processing fruit is additionally driven by the strong fresh market demand. For the European apple crop, an average production volume is forecast. The fresh fruit warehouses were emptied in the summer and demand in the coming months is expected to be correspondingly strong. World apple juice concentrate inventories were at a historic low at the end of August. In view of the average crop prospects and lower raw material prices, prices for apple juice concentrate are projected to be lower than last year.
In Poland, AGRANA produced not-from-concentrate juice from storage apples until the middle of June. Processing of the new apple crop started at the end of July in Ukraine, the beginning of August in Poland and the end of August in Hungary, Austria and China. Berry processing in Poland, Hungary and Denmark ended in early September. Purchasing prices for the main berries – strawberry, black currant, sour cherry and elderberry – were signifi cantly higher than in the previous year on brisk demand and partially smaller harvests.
AGRANA uses an integrated system for the early identifi cation and monitoring of risks that are relevant to the Group. A detailed description of the Group's business risks is provided on pages 59 to 63 of the Annual Report 2010|11.
There are at present no known risks to the AGRANA Group's ability to continue in operational existence, and no future risks of this nature are currently discernible.
08 Against the backdrop of the current crisis of confi dence in the capital market, the general risk of customer/counterparty default has risen, and so has the risk regarding product prices and currencies. To control these risks, the risk management system is continually being refi ned.
In Austria at the end of September 2011, after several rounds of negotiation an agreement was concluded at the beginning of the new beet harvest between AGRANA and the Austrian beet growers association "Die Rübenbauern" for participation in the increase in sugar sales prices, from which AGRANA benefi ts as a result of high world market prices. Specifi cally, the beet growers can expect retroactive payments for beet from the 2010 harvest and higher prices for the 2011 beet crop.
On 12 October 2011 the European Commission is expected to submit proposed legislation to the Council of Agriculture Ministers and the European Parliament to extend the existing quota and price arrangements until 30 September 2016 and then phase them out. The Euro pean Parliament in June 2011 had already advocated rolling over the existing rules unchanged until at least 2020.
For the full 2011|12 fi nancial year, as a result of a positive market environment and based on the strong results of the fi rst six months, AGRANA expects an expansion in Group revenue and a signifi cant increase in pre-exceptionals operating profi t. The operating profi t growth will probably be driven primarily by the Sugar and Starch segments. The profi t increase is expected to be achieved, among other ways, through further process optimisation and energy effi ciency gains. The raw material markets remain volatile, which makes the forecast calculations more diffi cult.
In the Sugar segment, the current market conditions point to continuing year-on-year revenue growth in the second half of 2011|12, together with a profi t improvement. The supply and price situation can change rapidly as a result of the high volatility of world market prices for sugar, which because of the EU's need for imports have a growing impact on the intra-EU market as well. Forecast accuracy is therefore more uncertain than in the previous years. After the good fi rst half of the year, in which AGRANA benefi ted from the market conditions (especially in Southeastern Europe),
a positive trend is also anticipated for the second half of 2011|12. Raw material prices are likely to be higher than before, but at the same time, selling prices will adjust to the tight supply situation. Buttressed by fi rm world market prices and good utilization at all plants, profi t for the full 2011|12 fi nancial year is projected to grow signifi cantly from the prior year.
Given the positive developments in the fi rst six months of 2011|12, revenue in the Starch segment for the year as a whole is expected to be well above the prior-year fi gure. In the non-food sector, in isoglucose, bioethanol and co-products, market demand is foreseen to remain high. As a result of the fact that the higher input prices are covered by the market prices for the Group's products, AGRANA is optimistic that the prior year's operating margin will be surpassed. With the current developments in the sugar market, positive earnings eff ects will also be achieved in the area of starch saccharifi cation products (glucose and isoglucose).
In the Fruit segment, AGRANA expects a stabilisation in the fruit preparations volume trend in the second half of 2011|12. Generally, demand is not expected to rally very soon. By implementing planned projects, including the winning of new customers, AGRANA believes that, despite the lack of market vigour, volume sales in the second half will exceed those recorded in the year-earlier period. Fruit preparations revenue for the year as a whole is expected to increase modestly. In the medium and long term, the growth opportunities for fruit preparations continue to be seen as positive, as it is safe to assume that per capita consumption will keep rising. This applies particularly to those countries where AGRANA is investing in new plants and facilities (Russia, Egypt, South Africa and China), but also to North and Latin America. In the fruit juice concentrate operations, substantial earnings growth is expected for the 2011|12 fi nancial year, as higher concentrate prices were obtained with the contracts from the 2010 campaign. On the cost side, the savings measures of the past years are being continued. For the 2011 apple processing season (the second half of AGRANA's fi nancial year), raw material costs are projected to ease slightly. Overall for the Fruit segment, revenue is expected to increase while operating profi t before exceptional items should be steady at the prior year level.
In the 2011|12 fi nancial year, total investment in all three segments is being expanded to about € 100 million in order to provide lasting support for the Group's long-term growth trajectory.
FOR THE FIRST SIX MONTHS ENDED 31 AUGUST 2011 (UNAUDITED)
| Second quarter (1 June – 31 August) |
First six months (1 March – 31 August) |
|||
|---|---|---|---|---|
| CONSOLIDATED INCOME STATEMENT | 2011 12 | 2010 11 | 2011 12 | 2010 11 |
| ¤000 | ¤000 | ¤000 | ¤000 | |
| Revenue | 671,763 | 532,876 | 1,284,669 | 1,073,346 |
| Changes in inventories of fi nished and unfi nished goods | (61,395) | (53,540) | (125,720) | (158,779) |
| Own work capitalised | 551 | 959 | 1,347 | 1,681 |
| Other operating income | 7,604 | 7,088 | 13,334 | 13,233 |
| Cost of materials | (419,477) | (324,476) | (775,365) | (597,432) |
| Staff costs | (58,234) | (50,487) | (114,132) | (102,849) |
| Depreciation, amortisation and impairment losses | (17,120) | (17,897) | (33,977) | (35,491) |
| Other operating expenses | (68,573) | (64,046) | (133,410) | (128,958) |
| Operating profi t after exceptional items | 55,119 | 30,477 | 116,746 | 64,751 |
| Finance income | (217) | 4,073 | 1,982 | 5,822 |
| Finance expense | (11,411) | (13,841) | (19,842) | (21,828) |
| Net fi nancial items | (11,628) | (9,768) | (17,860) | (16,006) |
| Profi t before tax | 43,491 | 20,709 | 98,886 | 48,745 |
| Income tax expense | (8,860) | (3,301) | (21,177) | (11,390) |
| Profi t for the period | 34,631 | 17,408 | 77,709 | 37,355 |
| Attributable to shareholders of the parent | 34,492 | 16,877 | 76,094 | 36,559 |
| Attributable to non-controlling interests | 139 | 531 | 1,615 | 796 |
| Earnings per share under IFRS (basic and diluted) | € 2.43 | € 1.19 | € 5.36 | € 2.57 |
| Second quarter (1 June – 31 August) |
First six months (1 March – 31 August) |
||||
|---|---|---|---|---|---|
| CONSOLIDATED STATEMENT | 2011 12 | 2010 11 | 2011 12 | 2010 11 | |
| OF COMPREHENSIVE INCOME | ¤000 | ¤000 | ¤000 | ¤000 | |
| Profi t for the period | 34,631 | 17,408 | 77,709 | 37,355 | |
| Other comprehensive (expense)/income | |||||
| – Currency translation diff erences | (10,335) | (9,577) | (10,719) | 1,462 | |
| – Available-for-sale fi nancial assets | (14) | 168 | 34 | 268 | |
| – Cash fl ow hedges | (890) | 160 | (703) | (759) | |
| – Tax eff ect of cash fl ow hedges | 261 | (14) | 197 | 255 | |
| Other comprehensive (expense)/income for the period | (10,978) | (9,263) | (11,191) | 1,226 | |
| Total comprehensive income for the period | 23,653 | 8,145 | 66,518 | 38,581 | |
| Attributable to shareholders of the parent | 23,710 | 7,994 | 64,989 | 38,295 | |
| Attributable to non-controlling interests | (57) | 151 | 1,529 | 286 |
| CONSOLIDATED BALANCE SHEET | 31 August | 28 February | |
|---|---|---|---|
| 2011 | 2011 | ||
| ¤000 | ¤000 | ||
| ASSETS | |||
| A. | Non-current assets | ||
| Intangible assets | 248,438 | 248,551 | |
| Property, plant and equipment | 577,636 | 577,709 | |
| Securities | 104,748 | 104,598 | |
| Investments in non-consolidated subsidiaries and outside companies, and loan receivables | 6,152 | 6,152 | |
| Receivables and other assets | 10,269 | 13,827 | |
| Deferred tax assets | 33,601 | 31,000 | |
| 980,844 | 981,837 | ||
| B. | Current assets | ||
| Inventories | 435,303 | 528,241 | |
| Trade receivables and other assets | 477,418 | 400,107 | |
| Current tax assets | 10,087 | 7,179 | |
| Securities | 22 | 4,411 | |
| Cash and cash equivalents | 77,214 | 70,427 | |
| 1,000,044 | 1,010,365 | ||
| Total assets | 1,980,888 | 1,992,202 | |
| A. | EQUITY AND LIABILITIES Equity |
||
| Share capital | 103,210 | 103,210 | |
| Share premium and other capital reserves | 411,362 | 411,362 | |
| Retained earnings | 458,116 | 427,564 | |
| Equity attributable to shareholders of the parent | 972,688 | 942,136 | |
| Non-controlling interests | 30,188 | 28,558 | |
| 1,002,876 | 970,694 | ||
| B. | Non-current liabilities | ||
| Retirement and termination benefi t obligations | 41,974 | 41,957 | |
| Other provisions | 13,012 | 12,971 | |
| Borrowings | 224,721 | 267,004 | |
| Other payables | 1,893 | 2,308 | |
| Deferred tax liabilities | 18,632 | 19,088 | |
| 300,232 | 343,328 | ||
| C. | Current liabilities | ||
| Other provisions | 48,001 | ||
| Borrowings | 309,482 | ||
| Trade and other payables | 294,223 | ||
| Current tax liabilities | 26,074 | ||
| 677,780 | 39,787 294,868 328,619 14,906 678,180 |
| CONDENSED CONSOLIDATED CASH FLOW STATEMENT | 2011 12 | 2010 11 |
|---|---|---|
| for the fi rst six months (1 March – 31 August) | ¤000 | ¤000 |
| Operating cash fl ow before change in working capital | 119,461 | 76,950 |
| Gains on disposal of non-current assets | (1,002) | (82) |
| Change in working capital | (10,782) | 46,047 |
| Net cash from operating activities | 107,677 | 122,915 |
| Net cash (used in) investing activities | (34,829) | (14,467) |
| Net cash (used in) fi nancing activities | (64,675) | (92,678) |
| Net increase in cash and cash equivalents | 8,173 | 15,770 |
| Eff ect of movements in foreign exchange rates on cash and cash equivalents | (1,386) | 1,757 |
| Cash and cash equivalents at beginning of period | 70,427 | 70,388 |
| Cash and cash equivalents at end of period | 77,214 | 87,915 |
| Total | Non- | Equity | CONDENSED CONSOLIDATED |
|---|---|---|---|
| controlling | attributable to | STATEMENT OF CHANGES IN EQUITY | |
| interests | shareholders | for the fi rst six months (1 March – 31 August) | |
| of the parent | |||
| ¤000 | ¤000 | ¤000 | |
| 2011 12 | |||
| 970,695 | 28,558 | 942,137 | At 1 March 2011 |
| 2 (472) |
(474) | Fair value movements under IAS 39 | |
| (10,719) | (88) | (10,631) | Change in equity as a result of currency translation diff erences |
| (11,191) | (86) | (11,105) | Other comprehensive expense for the period |
| 77,709 | 1,615 | 76,094 | Profi t for the period |
| 66,518 | 1,529 | 64,989 | Total comprehensive income for the period |
| (34,866) | (781) | (34,085) | Dividends paid |
| 529 | 882 | (353) | Other changes |
| 1,002,876 | 30,188 | 972,688 | At 31 August 2011 |
| 2010 11 | |||
|---|---|---|---|
| At 1 March 2010 | 879,229 | 25,425 | 904,654 |
| Fair value movements under IAS 39 | (242) | 6 | (236) |
| Change in equity as a result of currency translation diff erences | 1,978 | (516) | 1,462 |
| Other comprehensive income/(expense) for the period | 1,736 | (510) | 1,226 |
| Profi t for the period | 36,559 | 796 | 37,355 |
| Total comprehensive income for the period | 38,295 | 286 | 38,581 |
| Dividends paid | (27,694) | (476) | (28,170) |
| Other changes | (491) | 315 | (176) |
| At 31 August 2010 | 889,339 | 25,550 | 914,889 |
| SEGMENT REPORTING | 2011 12 | 2010 11 | 2011 12 | 2010 11 | |
|---|---|---|---|---|---|
| for the fi rst six months | ¤000 | ¤000 | ¤000 | ¤000 | |
| (1 March – 31 August) | |||||
| Total revenue | Operating profi t | ||||
| Sugar | 475,893 | 392,895 | Sugar | 50,619 | 12,283 |
| Starch | 392,260 | 288,826 | Starch | 36,195 | 30,794 |
| Fruit | 461,973 | 434,564 | Fruit | 31,365 | 21,674 |
| Group | 1,330,126 | 1,116,285 | Group | 118,179 | 64,751 |
| Exceptional items | (1,433) | 0 | |||
| Operating profi t | |||||
| after exceptional items | 116,746 | 64,751 | |||
| Inter-segment revenue | Investment | ||||
| Sugar | (40,042) | (26,656) | Sugar | 11,828 | 8,209 |
| Starch | (4,575) | (16,188) | Starch | 7,645 | 2,876 |
| Fruit | (840) | (95) | Fruit | 16,006 | 8,007 |
| Group | (45,457) | (42,939) | Group | 35,479 | 19,092 |
| Revenue | Staff count | ||||
| Sugar | 435,851 | 366,239 | Sugar | 2,051 | 2,082 |
| Starch | 387,685 | 272,638 | Starch | 897 | 878 |
| Fruit | 461,133 | 434,469 | Fruit | 5,229 | 5,838 |
| SEGMENT REPORTING | 2011 12 | 2010 11 | 2011 12 | 2010 11 | |
|---|---|---|---|---|---|
| for the fi rst six months | ¤000 | ¤000 | ¤000 | ¤000 | |
| (1 March – 31 August) | |||||
| Total revenue | Operating profi t | ||||
| Sugar | 475,893 | 392,895 | Sugar | 50,619 | 12,283 |
| Starch | 392,260 | 288,826 | Starch | 36,195 | 30,794 |
| Fruit | 461,973 | 434,564 | Fruit | 31,365 | 21,674 |
| Group | 1,330,126 | 1,116,285 | Group | 118,179 | 64,751 |
| Exceptional items | (1,433) | 0 | |||
| Operating profi t | |||||
| after exceptional items | 116,746 | 64,751 | |||
| Inter-segment revenue | Investment | ||||
| Sugar | (40,042) | (26,656) | Sugar | 11,828 | 8,209 |
| Starch | (4,575) | (16,188) | Starch | 7,645 | 2,876 |
| Fruit | (840) | (95) | Fruit | 16,006 | 8,007 |
| Group | (45,457) | (42,939) | Group | 35,479 | 19,092 |
| Revenue | Staff count | ||||
| Sugar | 435,851 | 366,239 | Sugar | 2,051 | 2,082 |
| Starch | 387,685 | 272,638 | Starch | 897 | 878 |
| Fruit | 461,133 | 434,469 | Fruit | 5,229 | 5,838 |
| Group | 1,284,669 | 1,073,346 | Group | 8,177 | 8,798 |
The interim report of the AGRANA Group for the six months ended 31 August 2011 was prepared in accordance with the rules for interim fi nancial reporting under IAS 34, in compliance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board (IASB) and their interpretation by the International Financial Reporting Interpretations Committee (IFRIC). The interim consolidated fi nancial statements at and for the period ended 31 August 2011 were not audited or reviewed. The Management Board of AGRANA Beteiligungs-AG approved these interim fi nancial statements on 10 October 2011 for publication.
The annual report 2010|11 of the AGRANA Group is available on the Internet at www.agrana.com for online viewing or downloading.
In the preparation of these interim accounts, the IFRS and interpretations which became eff ective in the 2011|12 fi nancial year were applied. This did not have an impact on the presentation of the Group's fi nancial statements or on its fi nancial position, results of operations or cash fl ows. Except for these newly eff ective IFRS and interpretations, the same accounting methods were applied as in the preparation of the annual consolidated fi nancial statements for the year ended 28 February 2011 (the 2010|11 fi nancial year). The notes to those annual consolidated fi nancial statements therefore apply mutatis mutandis to these interim accounts. Corporate income taxes were determined on the basis of country-specifi c income tax rates, taking into account the tax planning for the full fi nancial year.
From 31 July 2011, three previously non-consolidated Romanian companies were included in the fi nancial statements for the fi rst time, by full consolidation: AGRANA AGRO SRL, located in Roman, Romania (principal business activity: grain production and processing of grain legumes); AGRANA BUZAU SRL, Buzău, Romania (principal activity: sugar production); and AGRANA TANDAREI SRL, Ţăndărei, Romania (principal activity: sugar production).
From the end of the fi rst half of fi nancial 2011|12, the Ukrainian company AGRANA Juice Ukraine TOV, in Vinnytsia, Ukraine, is consolidated for the fi rst time. This new company, in which AGRANA holds a 100% ownership interest, is fully consolidated in the Group fi nancial statements. The Group had already been producing fruit juice concentrates in Ukraine before, but the operations had thus far been part of AGRANA Fruit Ukraine TOV, Vinnytsia.
Until recently, AGRANA together with Yantai North Andre operated two apple juice concentrate plants as 50%-owned joint ventures in China. Negotiations had been held since last year with the Chinese joint venture partner in order for AGRANA to assume full ownership of one plant and transfer its 50% interest in the other plant to the partner. These negotiations were completed in the summer. With eff ect from 1 August 2011 the Yongji Andre Juice Co., Ltd. joint venture in Yongji City, China, was deconsolidated and the former joint venture Xianyang Andre Juice Co., Ltd. in Xianyang City, China, was for the fi rst time fully consolidated in the Group fi nancial statements.
Most of the Group's sugar production falls into the three months from October to December. Depreciation and impairment of plant and equipment used in the campaign are therefore incurred largely in the fi nancial third quarter. The material costs, staff costs and other operating expenses incurred before the sugar campaign in preparation for production are recognised intra-year under the respective type of expense and capitalised within inventories as unfi nished goods. In the prior fi nancial year, these expenses were recognised intra-year on an accrual basis as prepaid expenses in the items "trade receivables and other assets" and "receivables and other assets", and only in the course of the campaign was the consumption then recognised under the respective type of expense.
Operating profi t after exceptional items in the fi rst half of 2011|12 was € 116.7 million (H1 2010|11: € 64.8 million). This profi t growth was driven by all three segments, Sugar, Starch and Fruit, with the strongest increase achieved in the Sugar segment.
Exceptional items amounted to an expense of just under € 1.5 million, resulting from the restructuring in connection with the joint venture separation of the Juice companies in China. This exceptional item is reported in the income statement within other operating expenses.
Net fi nancial items totalled a net expense of € 17.9 million (H1 2010|11: net expense of 16.0 million) and resulted largely from the net interest expense.
After taxes, Group profi t for the fi rst half of the fi nancial year was € 77.7 million (H1 2010|11: € 37.4 million).
In the six months to the end of August 2011, cash and cash equivalents grew to € 77.2 million, an increase of € 6.8 million from the beginning of the fi nancial year.
Operating cash fl ow before change in working capital grew by € 42.5 million from the fi rst half of the prior year, to € 119.5 million (H1 2010|11: € 77.0 million). The main driver of this movement was profi t for the period, which improved by € 40.3 million to € 77.7 million (H1 2010|11: € 37.4 million). Working capital rose by € 10.8 million in the reporting period (H1 2010|11: reduction of € 46.0 million), also because sugar purchases meant that inventories were drawn down less strongly than in the prior year. Net cash from operating activities during the fi rst half of 2011|12 was € 107.7 million (H1 2010|11: € 122.9 million).
Net cash used in investing activities, at € 34.8 million (H1 2010|11: net cash used of € 14.5 million), refl ected the higher purchases during the fi rst half of 2011|12 of property, plant and equipment in the Sugar segment (especially in Austria), in the Starch segment (notably in Austria and Hungary) and in the Fruit segment (above all in the USA, Poland and Hungary). It includes a payment of € 5.5 million made to the former joint venture partner as part of the joint venture separation in China to refl ect the excess value of the acquired 50% stake in Xianyang Andre Juice Co., Ltd.
The reduction of € 42.3 million in non-current borrowings combined with an increase of € 14.6 million in current borrowings, together with the dividend payment of € 34.1 million by AGRANA Beteiligungs-AG (H1 2010|11: € 27.7 million), resulted in net cash use of € 64.7 million in fi nancing activities (H1 2010|11: net cash use of € 92.7 million).
The reduction of € 11.3 million in total assets since 28 February 2011 to a new total of € 1,980.9 million was driven primarily by the contraction in inventories, as in the fi rst half of the prior year. On the liabilities side, there were decreases in borrowings and in trade and other payables. With total equity of € 1,002.9 million (28 February 2011: € 970.7 million), the equity ratio at the end of August was 50.6% (28 February 2011: 48.7%).
In the fi rst six months of the fi nancial year the AGRANA Group had an average of 8,177 employees (H1 2010|11: 8,798). A reduction of about 600 positions in the Fruit segment was attributable mainly to the lower requirement for seasonal labour in Ukraine and Mexico.
There were no material changes in related party relationships since the year-end balance sheet date of 28 February 2011. Transactions with related parties as defi ned in IAS 24 are conducted on arm's length terms. Details of individual related party relationships are provided in the AGRANA Annual Report for the year ended 28 February 2011.
Information on this is provided in the section "Events after the reporting date" on page 8.
We confi rm that, to the best of our knowledge:
█ the condensed consolidated interim fi nancial statements, which have been prepared in accordance with the applicable accounting standards, give a true and fair view of the Group's fi nancial position, results of operations and cash fl ows; and
█ the Group's management report for the fi rst six months gives a true and fair view of the fi nancial position, results of operations and cash fl ows of the Group in relation to (1) the important events in the fi rst half of the fi nancial year and their eff ects on the condensed consolidated interim fi nancial statements, (2) the principal risks and uncertainties for the remaining six months of the fi nancial year, and (3) the reportable signifi cant transactions with related parties.
Vienna, 10 October 2011
Johann Marihart Fritz Gattermayer
Walter Grausam Thomas Kölbl Member of the Management Board Member of the Management Board
Chief Executive Offi cer Member of the Management Board
This interim report 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 diff er 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, infl ation 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 report, and does not accept any liability in the event that assumptions and estimates prove to be incorrect.
To an insignifi cant extent, totals in this report may not add, as a result of the standard round-half-up convention used in rounding individual amounts and percentages.
| 12 January 2012 | Publication of results for fi rst three quarters of 2011 12 |
|---|---|
| 15 May 2012 | Press conference on annual results for 2011 12 |
| 2 July 2012 | Annual General Meeting for 2011 12 |
| 5 July 2012 | Ex-dividend date, dividend payment date |
| 12 July 2012 | Publication of results for fi rst quarter of 2012 13 |
| 11 October 2012 | Publication of results for fi rst half of 2012 13 |
AGRANA Beteiligungs-AG Donau-City-Strasse 9 1220 Vienna, Austria www.agrana.com
Corporate Communications/Investor Relations: Hannes Haider Phone: +43-1-211 37-12905
| Fax: | +43-1-211 37-12045 |
|---|---|
| E-mail: | [email protected] |
Corporate Communications/Public Relations: Christine Göller
| Phone: | +43-1-211 37-12084 |
|---|---|
| Fax: | +43-1-211 37-12045 |
| E-mail: | [email protected] |
This English translation of the AGRANA report is solely for readers' convenience. Only the German-language report is defi nitive.
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