Interim / Quarterly Report • Jan 12, 2012
Interim / Quarterly Report
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1 Debt-equity ratio (ratio of net debt to total equity).
| Key fi nancials | Q1–Q3 | Q1–Q3 |
|---|---|---|
| AGRANA Group | 2011 12 | 2010 11 |
| Revenue | € 1,952.2m | € 1,624.4m |
| EBITDA | € 256.2m | € 164.4m |
| Operating profi t before | ||
| exceptional items | € 198.7m | € 104.8m |
| Operating margin | 10.2% | 6.5% |
| Exceptional items | (€ 1.4m) | € 0.0m |
| Operating profi t after | ||
| exceptional items | € 197.3m | € 104.8m |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 62.7m | € 28.0m |
| Staff count | 8,109 | 8,558 |
Revenue of the AGRANA Group in the fi rst three quarters of the 2011|12 fi nancial year (the nine months ended 30 November 2011) increased by € 327.8 million or 20.2% to € 1,952.2 (Q1–Q3 2010|11: € 1,624.4 million). The revenue growth in all three segments was driven by positive market trends in the Sugar and Starch segments and was achieved despite slightly lower sales volumes in the Fruit segment.
Operating profi t before exceptional items, at € 198.7 million, was up € 93.9 million or 89.6% from the fi rst three quarters of 2010|11 (€ 104.8 million). The main contributions to this excellent earnings trend came from the Sugar and Starch segments. Thus, the optimization measures taken in the prior years bore dividends, and the Group's results in the fi rst nine months also benefi ted from the good market conditions, especially in the Sugar and Starch businesses. As a result of the unwinding of the Chinese joint ventures in the fruit juice concentrate activities between AGRANA and Yantai North Andre, a net exceptional items expense of approximately € 1.4 million was incurred in the second quarter of 2011|12. Net fi nancial items in the fi rst three quarters of 2011|12 amounted to a net expense of € 30.6 million (Q1–Q3 2010|11: net expense of € 20.2 million); with the interest result remaining constant, the change year-on-year in net fi nancial items was attributable to higher unrealised foreign exchange losses (notably in Hungary and Poland). After a tax expense of € 37.0 million, corresponding to a tax rate of 22.2% (Q1–Q3 2010|11: 23.1%), profi t for the period was € 129.7 million (Q1–Q3 2010|11: € 65.0 million). Earnings per share attributable to shareholders of AGRANA rose from € 4.43 to € 8.90.
In the fi rst three quarters of 2011|12, € 62.7 million was invested in purchases of property, plant and equipment and intangible assets (Q1–Q3 2010|11: € 28.0 million). The Sugar segment's € 18.4 million share of this (compared with € 10.3 million in Q1–Q3 2010|11) was primarily for the construction of the 70,000 tonnes capacity sugar silo in Tulln, Austria, which was commissioned in the middle of October. 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 Sereď, Slovakia, were completed in time before the beet campaign. The newly built third fermenter for the biogas plant in Kaposvár, Hungary, was successfully commissioned at the beginning of 2012. In the Starch segment, AGRANA invested € 18.7 million (Q1–Q3 2010|11: € 4.9 million), especially in the implementation of the biomass boiler and the expansion of corn processing capacity in Szabadegyháza, Hungary. As well, industrial land was acquired at the Austrian corn starch plant in Aschach and evaporator capacity at the bioethanol plant in Pischelsdorf, Austria, was expanded. Investment in the Fruit segment amounted to approximately € 25.6 million (Q1–Q3 2010|11: € 12.7 million). The new warehouse for fi nished product in Serpuchov, Russia, began operation in June 2011 and the addition for the planned capacity expansion is 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). In Gleisdorf, Austria, the second Choco-Crispies production line came on stream in December. 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 optimization of operations in Poland and Hungary.
Operating cash fl ow before change in working capital increased by 57.4% year-on-year to € 209.5 million (Q1–Q3 2010|11: € 133.1 million), in step with the rise in operating profi tability. With the increase of € 186.8 million in working capital in the fi rst three quarters (Q1–Q3 2010|11: increase of € 87.6 million), driven by seasonality, raw material prices and buying-in, net cash from operating activities amounted to € 22.7 million (Q1–Q3 2010|11: € 45.6 million). Net cash used in investing activities was € 62.2 million (Q1–Q3 2010|11: net cash used of € 25.2 million) on higher outfl ows for investment in property, plant and equipment and intangibles. Refl ecting the dividend payment and a net increase in borrowings, net cash from fi nancing activities was € 32.1 million (Q1–Q3 2010|11: € 41.4 million).
Total assets grew by 15.4% from 28 February 2011, while the equity ratio eased from 48.7% to 45.0% despite an absolute increase in equity.
A seasonal increase was seen in current assets, particularly through the campaign-related build-up of inventories (refl ecting primarily purchases of raw materials, but also higher purchases of goods for resale) and there was a rise in trade receivables. Non-current liabilities declined as a result of reduced long-term borrowings. Current liabilities increased, due mainly to higher trade and other payables; to fund the working capital, current borrowings were also expanded.
Net debt at 30 November 2011 stood at € 466.2 million, up € 83.8 million from the 2010|11 fi nancial year-end level of € 382.4 million. The gearing ratio of 45.1% at 30 Novem ber 2011 was above the level of 28 February 2011 of 39.4%.
| Share data | Q1–Q3 |
|---|---|
| 2011 12 | |
| High (5 Jul 2011) | € 86.43 |
| Low (29 Nov 2011) | € 72.50 |
| Closing price (30 Nov 2011) | € 73.50 |
| Closing book value per share (30 Nov 2011) | € 70.42 |
| Closing market capitalisation (30 Nov 2011) | € 1,043.8m |
AGRANA started the 2011|12 fi nancial year at a share price of € 80.00. With an average trading volume of almost 2,200 shares per day (based on double counting, as published by the Vienna Stock Exchange), the share price rose to more than € 86 since June following the increase in the results forecast for the full 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 was not immune to this trend and fell as low as under € 77 before stabilising for a prolonged period at above € 80 in this volatile stock market setting. Since mid-November, however, the quotation for AGRANA's shares came under pressure again and declined as part of the Vienna Stock Exchange's downward movement amid the international crisis of confi dence in the capital market. Ultimately, AGRANA's share price eased by 8.13% from 1 March to 30 November 2011, thus performing relatively much better than the Austrian blue-chip ATX index, which fell by 36.07% over the same period. The share price performance can be followed in the investor relations section of the AGRANA homepage at www.agrana.com.
The market capitalisation at 30 November 2011 was € 1,043.8 million, with an unchanged 14,202,040 shares outstanding.
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). From the starting date of index calculation (30 December 2009, at 1,000 index points) the ATX CPS was up by 67.54% on the reporting date of 30 November 2011, strongly outperforming all three other new sector indices (ATX Basic Industries: –7.40%, ATX Financials: –31.57%, ATX Industrial Goods & Services: +10.93%) and clearly beating the ATX Prime (–22.01%).
In its preliminary estimate for the 2011|12 sugar marketing year, F. O. Licht predicts a world sugar surplus. Total production is projected at 174.1 million tonnes of sugar (2010|11: 165.5 million tonnes), while consumption is estimated to grow to 163.9 million tonnes (2011|12: 160.1 million tonnes), leading to a small increase in sugar stockpiles.
Regionally, this increase is expected to occur mainly in Asia and Europe. The Asian production surplus is forecast at 3.8 million tonnes, based on production of 64.8 million tonnes. A signifi cant rise in sugar production is also expected in Europe, where overall production is to grow by 5.1 million tonnes to a new total of 29.4 million tonnes.
India will probably remain a net exporter in the 2011|12 sugar marketing year and could further expand its exports, provided that the current measures to boost production are maintained and the Indian government continues to loosen export rules. Production in Brazil could be less than recently expected due to ageing cane plants, but Thailand, the world's second largest sugar exporter, may be able to replicate last year's high output.
The global production surplus for the 2011|12 sugar marketing year is currently estimated at about 5.8 million tonnes, an increase of 5.1 million tonnes from the previous year. This could ease the tightness of world sugar inventories, which have shrunk to their lowest level in 20 years after the weaker harvests in the last two campaigns.
To increase sugar supply in the EU market in the 2011|12 sugar marketing year, the European Commission has taken two measures for the time being. For 2011|12 the Commis sion has approved the sale of non-quota sugar as quota sugar for the food sector in the EU market. The initial ceiling under this initiative is 400,000 tonnes. For this reclassifi cation the sugar manufacturers must pay a levy of € 85 per tonne. In addition to this measure, the Commission has issued a standing invitation to tender for sugar imports at reduced tariff s. By December 2011 about 150,000 tonnes of raw sugar were approved for tariff reduced import.
In response to the good sugar production fi gures inside the EU, the European Commission has opened export quotas of European non-quota sugar. In total, 1.35 million tonnes can be exported for the 2011|12 sugar marketing year; this represents the export limit set by the World Trade Organization (WTO). Beyond the sales of non-quota sugar to the chemical industry, this created marketing opportunities for this year's production of out-of-quota sugar.
On 12 October 2011 the European Commission submitted proposed legislation to the Council of Agriculture Ministers and the European Parliament not to extend the existing quota and price arrangements past 30 September 2015. By contrast, in June 2011 the European Parliament had already advocated rolling over the existing rules unchanged until at least 2020.
| Key fi nancials | Q3 | Q3 |
|---|---|---|
| Sugar segment | 2011 12 | 2010 11 |
| Revenue | € 255.5m | € 193.9m |
| EBITDA | € 51.4m | € 22.4m |
| Operating profi t before | ||
| exceptional items | € 43.7m | € 13.7m |
| Operating margin | 17.1% | 7.1% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 6.6m | € 2.1m |
| Key fi nancials | Q1–Q3 | Q1–Q3 |
| Sugar segment | 2011 12 | 2010 11 |
| Revenue | € 691.4m | € 560.1m |
| EBITDA | € 107.1m | € 39.9m |
| Operating profi t before | ||
| exceptional items | € 94.3m | € 26.0m |
| Operating margin | 13.6% | 4.6% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 18.4m | € 10.3m |
05 EU sugar market In the third quarter the Sugar segment again delivered very good revenue and earnings results. Cumulatively over the fi rst three quarters of 2011|12, revenue grew by 23.4% from the year-earlier period, to € 691.4 million. High quota sugar sales were achieved both with resellers and the sugarusing 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 in the fi rst four months of the year 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 in some cases diffi cult supply situation before the start of the campaign, especially in defi cit markets such as Hungary, stimulated additional interest from customers in mediumterm contracts.
The Sugar segment's operating profi t of € 94.3 million before exceptional items (Q1–3 2010|11: € 26.0 million) represented a powerful improvement. Notable contributing factors were the availability of non-quota sugar and timely sugar sourcing in the world market, 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 in the fi rst half of 2011|12. The operating profi t improvement was also helped by the good 2011|12 beet campaign with high beet quality, an early campaign start and thus a signifi cant year-on-year increase in production by the end of November. In addition to the beet sugar business, the refi ning and reselling activities also yielded considerably higher margins than before.
For 2011 the amount of area planted to sugar beet for the AGRANA Group was expanded to approximately 92,000 hectares (prior year: about 86,000 hectares). In total, more than 5.8 million tonnes of beet was harvested (prior year: 5.4 million tonnes). As the sugar content of the crop rose to a relatively high level in all regions thanks to the favourable weather during the growing season, AGRANA's beet sugar production is forecast at about 916,000 tonnes (prior year: 803,000 tonnes). Beet yields (amounts of beet harvested per hectare) were very satisfactory, especially in Austria and the Czech Republic. Although comparatively low precip itation in Slovakia, Hungary and Romania (particularly in August and September) led to crop losses, beet yields in these countries still exceeded the long-term average.
AGRANA BETEILIGUNGS-AG Q1–Q3 2011 | 12
06 In Austria at the end of September, 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.
The International Grains Council (IGC) is estimating the world's grain production in the 2011|12 marketing year at 1.82 billion tonnes (2010|11: 1.75 billion tonnes), an amount marginally lower than the forecast consumption of 1.83 billion tonnes. For wheat, production is forecast at 683 million tonnes (2010|11: 653 million tonnes), and the prediction for corn (maize) is 853 million tonnes (2010|11: 826 million tonnes). Worldwide consumption is estimated at 679 million tonnes for wheat and 861 million tonnes for corn.
Total grain production in the European Union is estimated at approximately 284 million tonnes (2010|11: 273 million tonnes). Of this total, the soft wheat harvest is to account for about 130 million tonnes, which is more than the 2010 harvest. Corn production in the EU in 2011 is forecast at about 64 million tonnes, or 16% more than in the prior year.
| Key fi nancials | Q3 | Q3 |
|---|---|---|
| Starch segment | 2011 12 | 2010 11 |
| Revenue | € 199.8m | € 152.0m |
| EBITDA | € 37.5m | € 19.2m |
| Operating profi t before | ||
| exceptional items | € 32.0m | € 12.7m |
| Operating margin | 16.0% | 8.4% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 11.0m | € 2.0m |
| Key fi nancials | Q1–Q3 | Q1–Q3 |
| Starch segment | 2011 12 | 2010 11 |
| Revenue | € 587.5m | € 424.6m |
| EBITDA | € 86.5m | € 62.6m |
| Operating profi t before | ||
| exceptional items | € 68.2m | € 43.5m |
| Operating margin | 11.6% | 10.2% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 18.7m | € 4.9m |
The revenue growth of 38.4% in the Starch segment in the fi rst nine months of 2011|12 to € 587.5 million resulted mostly from higher selling 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 by-products. In bioethanol, both sales prices and volumes exceeded year-earlier levels. As well, the restricted physical supply in the sugar market had the eff ect of boosting sales of starch saccharifi cation products.
The operating profi t of € 68.2 million represented a signifi cant improvement of € 24.7 million from the prior-year com parative period. The higher sales prices for all core products outweighed the eff ect of the risen raw material prices and were the key to the EBIT growth. Especially AGRANA Stärke GmbH and the starch plants in Hungary and Romania generated very good earnings.
On a planting area of about 5,900 hectares (unchanged from the prior year), the starch potato harvest in Austria amounted to approximately 230,000 tonnes in the 2011|12 fi nancial year (prior year: 186,000 tonnes). The resulting potato starch production this year is predicted at about 52,500 tonnes (prior year: 40,100 tonnes). This would exceed the potato starch quota by about 10% (prior year: 16% under quota); the excess amount will be marketed as "C starch" exports.
About 112,500 tonnes of wet corn was processed in Aschach, Austria, an amount close to that of the prior year. In the 90 days (prior year: 98 days) of the campaign, 101,000 tonnes of yellow corn and 11,500 tonnes of specialty corn (waxy corn, organic corn, organic waxy, and certifi ed non-GMO corn) were used. Since then, production was switched back to the use of dry corn. For the full fi nancial year, corn processing volume is expected to reach about 398,000 tonnes (prior year: 384,000 tonnes).
At Hungarian subsidiary HUNGRANA, a total of 1.07 million tonnes of corn should be processed in 2011|12 (prior year: 1.04 million tonnes). Utilization of wet corn was completed at the end of November and, at 215,000 tonnes, surpassed the prior year's 190,000 tonnes. HUNGRANA has an isoglucose quota of about 220,000 tonnes.
Total corn processing in Romania in the 2011|12 fi nancial year is projected at around 42,000 tonnes (prior year: 36,000 tonnes). During the autumn campaign about 12,000 tonnes of wet corn was used, as in the previous year.
In the bioethanol plant at Pischelsdorf, Austria, approximately 85,000 tonnes (prior year: 60,000 tonnes) of wet corn was processed from the middle of September to early December. Over the full fi nancial year, the plant will use a total of about 550,000 tonnes (prior year: 530,000 tonnes) of grain.
In fruit preparations the market situation remains diffi cult as a result of the sharp price hikes for dairy products; coupled with the economic uncertainty, this led to a general decline in consumer confi dence and dampened consumption of fruit yoghurts. Added to this are cost-saving measures by the dairy industry, with reduced levels of fruit content, cuts in advertising budgets and postponed product launches. In the fi rst half of the 2011 calendar year, the worldwide fruit yoghurt market still showed modest growth of 0.8%. By contrast, market data recently published by Nielsen (The Nielsen Co.) and IRI (Information Resources Inc.), as well as quarterly results of companies in the industry from the third quarter of the calendar year onward, showed in some cases signifi cant declines, particularly in Western and Central Europe but also in North America. The growth rates in Eastern Europe, South America and Asia are in the low single digits and thus well below expectations. At the same time, raw material costs have in some cases risen by up to 50%. The price increases which this necessitates are further slowing the volume trend in the stagnating market.
In the fruit juice concentrate business, world market prices have been trending upward since spring 2010; the higher prices continued to become established in 2011. Unlike the stable North American markets, in Western Europe there was a slight decrease in consumption of fruit juices and fruit juice drinks. Sales volumes in Eastern Europe and Southeast Asia were stable.
| Key fi nancials | Q3 | Q3 |
|---|---|---|
| Fruit segment | 2011 12 | 2010 11 |
| Revenue | € 212.3m | € 205.2m |
| EBITDA | € 15.2m | € 22.6m |
| Operating profi t before | ||
| exceptional items | € 4.8m | € 13.7m |
| Operating margin | 2.3% | 6.7% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 9.6m | € 4.7m |
| Key fi nancials | Q1–Q3 | Q1–Q3 |
| Fruit segment | 2011 12 | 2010 11 |
| Revenue | € 673.4m | € 639.7m |
| EBITDA | € 62.6m | € 61.9m |
| Operating profi t before | ||
| exceptional items | € 36.2m | € 35.4m |
| Operating margin | 5.4% | 5.5% |
| Purchases of property, plant | ||
| and equipment and intangibles1 | € 25.6m | € 12.7m |
07 FRUIT SEGMENT Revenue in the Fruit segment was pushed up by 5.3% in the fi rst three quarters of 2011|12, to € 673.4 million. On the fruit preparations side, sales volume declined yearon-year in the fi rst nine months in a challenging market setting. Aside from the partially contracting markets, the reasons were the market entry of a new competitor in Russia and market share losses in Western Europe and North America. In the particularly competitive Central European market and in South America, AGRANA held its own well and maintained its market share. A small increase in market share was recorded in Asia; the reduction in China caused by lower prices and new yoghurt products without fruit ingredients was balanced by gains in South Korea, Australia and South Africa. The new factories in Egypt and South Africa successfully began operation and started to supply the local markets.
In the fruit juice concentrate business, the price of European apple juice concentrate has eased somewhat over the last twelve months amid an average European crop, while the price for Chinese apple juice concentrate climbed to a historic high as the strong demand for dessert apples also sharply drove up the price of juice apples in China. On balance the selling prices for fruit juice concentrates remain stable at a high absolute level, while sales quantities have (especially in the past few months) been declining somewhat.
In the fi rst three quarters of 2011|12, operating profi t, at € 36.2 million, was held slightly above the year-ago level of € 35.4 million, while the operating margin eased very mildly to 5.4% (Q1–Q3 2010|11: 5.5%). The margin improvement in the fi rst half of the year was later consumed by a continuing reduction in sales volumes of fruit preparations and fruit juice concentrates, leading to a decline in segment earnings in the third quarter.
Like 2010, the 2011 calendar year also saw signifi cant fruit price increases in the world's largest fruit growing regions for spring and summer harvests. For some fruits, such as cherry, blueberry and tropical fruits, there were extreme price spikes caused by a combination of high market demand and unfavourable weather. The autumn harvest prices were in line with the relatively high prices for the summer harvests. This trend was amplifi ed by excess demand, which was observed especially for strawberry, cherry and blueberry in South America. Overall, however, the market appears to be regaining stability, as high price expectations on the part of suppliers are in some cases no longer accepted by buyers.
The apple crop in Europe, except for Hungary, was average in quantity but of very good quality. European fruit growers preferentially supplied the fresh fruit market, and empty apple and apple juice concentrate warehouses thus resulted
08 in a fi rm raw material price. The apple processing season came to a close in the middle of November at all facilities other than in Poland and China, where it ran until the middle of December.
AGRANA uses an integrated system for the early identifi cation and monitoring of risks that are relevant to the Group. 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. A detailed description of the Group's business risks is provided on pages 59 to 63 of the Annual Report 2010|11.
As already noted in the Annual Report, the Austrian Federal Competition Authority in September 2010 fi led an application with the Cartel Court in Vienna against, among other parties, AGRANA Zucker GmbH, Vienna, and Südzucker AG Mannheim/Ochsenfurt, Mannheim, Germany, for an alleged contravention of the Austrian Cartel Act. The defendants continue to view the underlying charge as groundless and believe that the evidentiary hearings conducted by the Cartel Court do not substantiate the plaintiff 's October 2011 petition for a fi ne.
Against the backdrop of the current crisis of confi dence in the capital market, the general risk of customer/counterparty default has risen, as has the level of currency risk. To control these risks, the risk management system is continually refi ned.
No signifi cant reportable events relevant to the Group's fi nancial position or to its results of operations or cash fl ows occurred after the balance sheet date of 30 November 2011.
For the full 2011|12 fi nancial year, as a result of a positive market environment and based on the very good results of the fi rst nine months, AGRANA expects an expansion in Group revenue to about € 2.5 billion and a substantial increase in pre-exceptionals operating profi t. This operating profi t growth is driven by the Sugar and Starch segments. The improvement in processes and the contract situation, both on the purchasing and sales sides, together form the centrepiece of the continuing positive earnings picture.
In the Sugar segment, the current positive market conditions point to year-on-year revenue growth in the 2011|12 fi nancial year, together with a strong profi t improvement. 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, makes the accuracy of forecasts more uncertain than in the previous years. After the fi rst nine months, in which AGRANA benefi ted from the market conditions (especially in the Eastern European markets), a positive trend is also expected for the rest of the 2011|12 fi nancial year, even if the fourth quarter always marks the seasonal low in revenue and earnings. Although raw material prices are likely to remain higher than before, selling prices have also risen. Supported by fi rm world market prices and good utilization at all plants, the Sugar segment's earnings for the full 2011|12 fi nancial year are projected to grow signifi cantly from the prior year.
Given the positive developments in the fi rst three quarters of 2011|12, revenue in the Starch segment for the year as a whole is also expected to be well above the prior-year fi gure. In the non-food sector and for isoglucose and coproducts, market demand is foreseen to remain high in the fourth quarter. 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 this fi nancial year's operating margin will surpass the prior year's. 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 the volume trend in fruit preparations to stabilise in the fi nal quarter of 2011|12, but does not believe that the prior-year volume can still be reached. By implementing planned projects, including the acquisition of new customers, AGRANA believes that, despite the lack of market vigour, it will be able to attain sales volumes in the next fi nancial year that will exceed those of 2011|12 and the prior years. In fruit juice concentrates, a substantial earnings improvement is anticipated for the 2011|12 fi nancial year; on the cost front, the savings measures of the past years are being continued. However, overall for the Fruit segment for 2011|12, revenue is forecast to increase on higher prices while operating profi t before exceptional items is expected to fall signifi cantly from the prior-year level. Future growth is to be generated by the planned merger with Ybbstaler Fruit Austria GmbH, but for com petition reasons the deal is not likely to be implemented until the beginning of the next, 2012|13 fi nancial year.
In fi nancial 2011|12, total investment in all three segments is expanding to just over € 100 million in order to provide lasting support for the Group's long-term growth trajectory.
FOR THE FIRST NINE MONTHS ENDED 30 NOVEMBER 2011 (UNAUDITED)
| Third quarter (1 September – 30 November) |
First nine months (1 March – 30 November) |
|||
|---|---|---|---|---|
| CONSOLIDATED INCOME STATEMENT | 2011 12 | 2010 11 | 2011 12 | 2010 11 |
| ¤000 | ¤000 | ¤000 | ¤000 | |
| Revenue | 667,560 | 551,036 | 1,952,229 | 1,624,382 |
| Changes in inventories of fi nished and unfi nished goods | 233,842 | 163,959 | 108,122 | 5,180 |
| Own work capitalised | 929 | 484 | 2,276 | 2,165 |
| Other operating income | 13,336 | 9,246 | 26,670 | 22,479 |
| Cost of materials | (634,858) | (519,370) | (1,410,223) | (1,116,802) |
| Staff costs | (63,911) | (67,904) | (178,043) | (170,753) |
| Depreciation, amortisation and impairment losses | (23,562) | (24,176) | (57,539) | (59,667) |
| Other operating expenses | (112,808) | (73,246) | (246,218) | (202,204) |
| Operating profi t after exceptional items | 80,528 | 40,029 | 197,274 | 104,780 |
| Finance income | 2,369 | 1,528 | 4,351 | 7,350 |
| Finance expense | (15,096) | (5,761) | (34,938) | (27,589) |
| Net fi nancial items | (12,727) | (4,233) | (30,587) | (20,239) |
| Profi t before tax | 67,801 | 35,796 | 166,687 | 84,541 |
| Income tax expense | (15,820) | (8,122) | (36,997) | (19,512) |
| Profi t for the period | 51,981 | 27,674 | 129,690 | 65,029 |
| Attributable to shareholders of the parent | 50,365 | 26,322 | 126,459 | 62,881 |
| Attributable to non-controlling interests | 1,616 | 1,352 | 3,231 | 2,148 |
| Earnings per share under IFRS (basic and diluted) | € 3.55 | € 1.85 | € 8.90 | € 4.43 |
| Third quarter (1 September – 30 November) |
First nine months (1 March – 30 November) |
||||
|---|---|---|---|---|---|
| CONSOLIDATED STATEMENT | 2011 12 | 2010 11 | 2011 12 | 2010 11 | |
| OF COMPREHENSIVE INCOME | ¤000 | ¤000 | ¤000 | ¤000 | |
| Profi t for the period | 51,981 | 27,674 | 129,690 | 65,029 | |
| Other comprehensive (expense)/income | |||||
| – Currency translation diff erences | (21,272) | (78) | (31,991) | 1,384 | |
| – Available-for-sale fi nancial assets | (404) | (308) | (370) | (40) | |
| – Cash fl ow hedges | (3,442) | (2,318) | (4,145) | (3,077) | |
| – Tax eff ect of cash fl ow hedges | 755 | 521 | 952 | 776 | |
| Other comprehensive (expense) for the period | (24,363) | (2,183) | (35,554) | (957) | |
| Total comprehensive income for the period | 27,618 | 25,491 | 94,136 | 64,072 | |
| Attributable to shareholders of the parent | 27,284 | 24,046 | 92,273 | 62,341 | |
| Attributable to non-controlling interests | 334 | 1,445 | 1,863 | 1,731 |
| CONSOLIDATED BALANCE SHEET | 30 November | 28 February | |
|---|---|---|---|
| 2011 | 2011 | ||
| ¤000 | ¤000 | ||
| ASSETS | |||
| A. | Non-current assets | ||
| Intangible assets | 247,248 | 248,551 | |
| Property, plant and equipment | 570,499 | 577,709 | |
| Securities | 104,246 | 104,598 | |
| Investments in non-consolidated subsidiaries and outside companies, and loan receivables | 6,150 | 6,152 | |
| Receivables and other assets | 10,163 | 13,827 | |
| Deferred tax assets | 31,439 | 31,000 | |
| 969,745 | 981,837 | ||
| B. | Current assets | ||
| Inventories | 766,299 | 528,241 | |
| Trade receivables and other assets | 489,334 | 400,107 | |
| Current tax assets | 11,750 | 7,179 | |
| Securities | 1,433 | 4,411 | |
| Cash and cash equivalents | 61,432 | 70,427 | |
| 1,330,248 | 1,010,365 | ||
| Total assets | 2,299,993 | 1,992,202 | |
| EQUITY AND LIABILITIES | |||
| A. | Equity | ||
| Share capital | 103,210 | ||
| Share premium and other capital reserves | 411,362 | ||
| Retained earnings | 485,550 | ||
| Equity attributable to shareholders of the parent | 1,000,122 | ||
| Non-controlling interests | 34,153 | ||
| 1,034,275 | |||
| B. | Non-current liabilities | ||
| Retirement and termination benefi t obligations | 42,142 | ||
| Other provisions | 13,054 | ||
| Borrowings | 258,900 | ||
| Other payables | 1,985 | ||
| Deferred tax liabilities | 18,328 | ||
| 334,409 | |||
| C. | Current liabilities | ||
| Other provisions | 28,439 | ||
| Borrowings | 374,443 | ||
| Trade and other payables Current tax liabilities |
494,397 34,030 |
103,210 411,362 427,564 942,136 28,558 970,694 41,957 12,971 267,004 2,308 19,088 343,328 39,787 294,868 328,619 14,906 |
Total equity and liabilities 2,299,993 1,992,202
| CONDENSED CONSOLIDATED CASH FLOW STATEMENT | 2011 12 | 2010 11 | |
|---|---|---|---|
| for the fi rst nine months (1 March – 30 November) | ¤000 | ¤000 | |
| Operating cash fl ow before change in working capital | 209,472 | 133,104 | |
| Losses on disposal of non-current assets | 80 | 103 | |
| Change in working capital | (186,821) | (87,568) | |
| Net cash from operating activities | 22,731 | 45,639 | |
| Net cash (used in) investing activities | (62,180) | (25,181) | |
| Net cash from fi nancing activities | 32,140 | 41,392 | |
| Net increase in cash and cash equivalents | (7,309) | 61,850 | |
| Eff ect of movements in foreign exchange rates on cash and cash equivalents | (1,687) | 1,700 | |
| Cash and cash equivalents at beginning of period | 70,427 | 70,388 | |
| Cash and cash equivalents at end of period | 61,432 | 133,938 |
| CONDENSED CONSOLIDATED | Equity | Non- | Total |
|---|---|---|---|
| STATEMENT OF CHANGES IN EQUITY | attributable to | controlling | |
| for the fi rst nine months (1 March – 30 November) | shareholders | interests | |
| of the parent | |||
| ¤000 | ¤000 | ¤000 | |
| 2011 12 | |||
| At 1 March 2011 | 942,136 | 28,558 | 970,694 |
| Fair value movements under IAS 39 | (3,647) | 84 | (3,563) |
| Change in equity as a result of currency translation diff erences | (30,539) | (1,452) | (31,991) |
| Other comprehensive (expense) for the period | (34,186) | (1,368) | (35,554) |
| Profi t for the period | 126,459 | 3,231 | 129,690 |
| Total comprehensive income for the period | 92,273 | 1,863 | 94,136 |
| Dividends paid | (34,085) | (765) | (34,850) |
| Other changes | (202) | 4,497 | 4,295 |
| At 30 November 2011 | 1,000,122 | 34,153 | 1,034,275 |
| 2010 11 | |||
|---|---|---|---|
| At 1 March 2010 | 879,229 | 25,425 | 904,654 |
| Fair value movements under IAS 39 | (2,342) | 1 | (2,341) |
| Change in equity as a result of currency translation diff erences | 1,802 | (418) | 1,384 |
| Other comprehensive (expense) for the period | (540) | (417) | (957) |
| Profi t for the period | 62,881 | 2,148 | 65,029 |
| Total comprehensive income for the period | 62,341 | 1,731 | 64,072 |
| Dividends paid | (27,694) | (476) | (28,170) |
| Other changes | (400) | 168 | (232) |
| At 30 November 2010 | 913,476 | 26,848 | 940,324 |
| SEGMENT REPORTING | 2011 12 | 2010 11 | 2011 12 | 2010 11 | |
|---|---|---|---|---|---|
| for the fi rst nine months | ¤000 | ¤000 | ¤000 | ¤000 | |
| (1 March – 30 November) | |||||
| Total revenue | Operating profi t | ||||
| Sugar | 751,150 | 602,995 | Sugar | 94,300 | 25,969 |
| Starch | 594,492 | 449,762 | Starch | 68,166 | 43,451 |
| Fruit | 674,439 | 639,852 | Fruit | 36,241 | 35,360 |
| Group | 2,020,081 | 1,692,609 | Group | 198,707 | 104,780 |
| Exceptional items | (1,433) | 0 | |||
| Operating profi t | |||||
| after exceptional items | 197,274 | 104,780 | |||
| Inter-segment revenue | Investment | ||||
| Sugar | (59,747) | (42,925) | Sugar | 18,420 | 10,337 |
| Starch | (7,034) | (25,150) | Starch | 18,671 | 4,934 |
| Fruit | (1,071) | (152) | Fruit | 25,600 | 12,698 |
| Group | (67,852) | (68,227) | Group | 62,691 | 27,969 |
| Revenue | Staff count | ||||
| Sugar | 691,403 | 560,070 | Sugar | 2,255 | 2,280 |
| Starch | 587,458 | 424,612 | Starch | 908 | 879 |
| Fruit | 673,368 | 639,700 | Fruit | 4,946 | 5,399 |
| Group | 1,952,229 | 1,624,382 | Group | 8,109 | 8,558 |
| 2011 12 | 2010 11 | |
|---|---|---|
| €000 | €000 | |
| Operating profit | ||
| Sugar | 94,300 | 25,969 |
| Starch | 68,166 | 43,451 |
| Fruit | 36,241 | 35,360 |
| Group | 198,707 | 104,780 |
| Exceptional items | (1,433) | 0 |
| Operating profit | ||
| after exceptional items | 197,274 | 104,780 |
| Investment | ||
| Sugar | 18,420 | 10,337 |
| Starch | 18,671 | 4,934 |
| Fruit | 25,600 | 12,698 |
| Group | 62,691 | 27,969 |
| Staff count | ||
| Sugar | 2,255 | 2,280 |
| Starch | 908 | 879 |
| Fruit | 4,946 | 5,399 |
| $C$ roun | 8109 | 8558 |
The interim report of the AGRANA Group for the nine months ended 30 November 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 Standards 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 30 November 2011 were not audited or reviewed. These interim fi nancial statements were released by the Management Board of AGRANA Beteiligungs-AG on 9 January 2012 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.
In the third quarter of 2011|12 there were no further changes in the list of entities included in the consolidated fi nancial statements.
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 in Buzău, Romania (principal activity: sugar production); and AGRANA TANDAREI SRL in 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, were consolidated for the fi rst time. This new company, in which AGRANA holds a 100% ownership inter est, is fully consolidated in the Group fi nancial statements. The Group had already previously been producing fruit juice concentrates in Ukraine, 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 three quarters of 2011|12 was € 197.3 million (Q1–Q3 2010|11: € 104.8 million). This profi t improvement was driven especially by the Sugar and Starch segments.
Exceptional items amounted to an expense of just under € 1.4 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 € 30.6 million (Q1–Q3 2010|11: net expense of € 20.2 million) and resulted largely from the net interest expense and foreign exchange eff ects (Polish złoty and Hungarian forint).
After taxes, Group profi t for the period was € 129.7 million (Q1–Q3 2010|11: € 65.0 million).
In the nine months to the end of November 2011, cash and cash equivalents decreased by € 9.0 million to € 61.4 million.
Operating cash fl ow before change in working capital grew by € 76.4 million from the prior-year comparative period, to € 209.5 million (Q1–Q3 2010|11: € 133.1 million). The main driver of this movement was profi t for the period, which improved by € 64.7 million to € 129.7 million (Q1–Q3 2010|11: € 65.0 million). The reduction in working capital by € 186.8 million (Q1–Q3 2010|11: reduction of € 87.6 million) was attributable primarily to stronger inventory growth and ultimately resulted in net cash from operating activities of € 22.7 million (Q1–Q3 2010|11: € 45.6 million).
Net cash used in investing activities, at € 62.2 million (Q1–Q3 2010|11: net cash used of € 25.2 million), refl ected the higher purchases during the fi rst three quarters of 2011|12 of property, plant and equipment in the Sugar segment (especially in Austria), the Starch segment (notably in Austria and Hungary) and the Fruit segment (above all in the USA, South Africa and Russia). It included 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.
On balance, an increase of € 71.0 million in current borrowings and a reduction of € 8.1 million in non-current borrowings, combined with the dividend payment by AGRANA Beteiligungs-AG, brought net cash from fi nancing activities to € 32.1 million (Q1–Q3 2010|11: € 41.4 million).
The increase of € 307.8 million in total assets since 28 February 2011 to a new total of € 2,300.0 million was, as in the prior year, driven mostly by the seasonal inventory growth in the Sugar and Fruit segments and a rise in trade receivables.
On the liabilities side, the reasons for the expansion in the balance sheet were higher borrowings and trade payables. With total equity of € 1,034.3 million (28 February 2011: € 970.7 million), the equity ratio at the end of November was 45.0% (28 February 2011: 48.7%).
In the fi rst nine months of the fi nancial year the AGRANA Group had an average of 8,109 employees (Q1–Q3 2010|11: 8,558). A reduction of about 450 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.
No signifi cant events occurred after the balance sheet date of 30 November 2011 that had a material eff ect on AGRANA's fi nancial position, results of operations or cash fl ows.
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 nine 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 three quarters 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 quarter of the fi nancial year, and (3) the reportable signifi cant transactions with related parties.
Vienna, 9 January 2012
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 Manage ment 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.
| 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 |
| 10 January 2013 | Publication of results for fi rst three quarters 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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