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AUGA group Interim / Quarterly Report 2020
2259_rns_2020-12-01_12ab9767-9475-41db-943b-a5fe7e6801a3.pdf
Interim / Quarterly Report
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PRESENTATION ON THE FINANCIAL RESULTS FOR 9 MONTHS OF 2020
AUGA group, AB
PRESENTED BY
Mindaugas Ambrasas CFO
Eimantas Gudonis Head of Finance Department
RESULTS
The results of the Group have improved despite the difficult situation in the world caused by the COVID-19 pandemic and economic instability.
Y2020 9-months results
AUGA group's revenue, profit and EBITDA have increased.
| 9M2020 | 9M2019 | Variance | FY2019 | |
|---|---|---|---|---|
| Revenue, EUR million | 62.38 | 47.05 | $+33%$ | 71.13 |
| Gross profit, EUR million | 11.88 | 8.00 | $+48%$ | 9.85 |
| EBT, EUR million | 0.44 | (1.28) | n/a | (3.22) |
| EBITDA, EUR million | 15.94 | 12.43 | $+28%$ | 17.12 |
EUR 1.45 million of fair value gain for this season's crops was recognized in 2019.
Results by segment CAUSE CRANIQUE
CROP GROWING
8 from 10 main crops have increased yields.
Cost level per ha is stable (+3% in average).
Overall positive results were negatively affected by several factors:
- lower quality of wheat (75% feed wheat in 2020, 35% in 2019) resulting in lower average selling prices (208 EUR/t in 2020, 262 EUR/t in 2019). Negative effect of EUR 2.6 million,
- earlier harvest of sugar beets negatively effected their yields. Negative effect of EUR 1.6 million.
Improved yields (+14% YoY in average)
Though slightly below our expectations (by 4% for wheat, 10% for legumes).
| Yield | 2018 | 2019 | 2020 |
|---|---|---|---|
| Wheat, t/ha | 2.83 | 4.21 | 4.13 |
| Legumes, t/ha | 1.41 | 1.67 | 773 |
| Costs | 2018/09 | 2019/09 | 2020/09 |
|---|---|---|---|
| Wheat, EUR/ha | 881 | 925 | |
| Legumes, EUR/ha | 790 | 830 |
CROP GROWING Wheat price dynamics
Both organic and conventional wheat market prices had decreased by around 5% in Q3 2020.
It had recovered by up to 10% in Q4 (as for end of October 2020).
*Germany, the largest EU market, is a benchmark for major organic product prices.
Source: www.ami-informiert.de, https://www.bmel-statistik.de/
CROP GROWING 2020 9-months results
Total fair value gain for 9M2020 was EUR 6.48 million. Additionally, EUR 1.45 million of fair value gain of this season's crops was recognized in 2019.
133 thous. tons of crops were sold in 2020 compared to 38.82 thous. tons sold in 2019. Excluding earlier sales of sugar beets, sales grew by 30%.
93% of 2020 harvest is already contracted or sold.
Full amount of subsidies / no sanctions for agricultural activities are expected in 2020 since the requirements for which the Group was penalized in 2019 does not apply for 2020.
Improved revenue and gross profit.
| 9M2020 | 9M2019 | Variance | FY2019 | |
|---|---|---|---|---|
| Total cultivated land, ha | 39,673 | 38,564 | $+3%$ | 38,564 |
| Total fair value of harvest, EUR million |
41.87 | 36.06 | $+16%$ | 38.26 |
| Total production cost, EUR million | 33.94 | 32.19 | $+5%$ | 34.43 |
| Gain (loss) on revaluation of biological assets (crops) recognized in reporting period, EUR million |
6.48 | 3.87 | $+67%$ | 5.28 |
| Total fair value gain (loss) on revaluation of biological assets, EUR million |
7.93 | 3.87 | $+105%$ | 5.28 |
| Sales revenue, EUR million | 27.89 | 16.44 | $+70%$ | 29.49 |
| Cost of sales, EUR million | 28.81 | 17.72 | $+63%$ | 30.45 |
| Inventory write-offs, EUR million | 0.97 | 0.73 | $+33%$ | 1.54 |
| Result of sales of agricultural produce, EUR million |
(1.89) | (2.01) | $+6%$ | (2.50) |
| Subsidies, EUR million | 5.57 | 5.27 | $+6%$ | 4.96 |
| Gross profit, EUR million | 10.16 | 7.13 | $+42%$ | 7.74 |
Results bysegment Dolle
DAIRY
Milk price and yield dynamics
The share of AUGA milk sold at prices of organic milk ranges between 90-100% and allows to maintain stable prices.
Milk yields are improving yearover-year.
Milk price in Germany vs. AUGA average milk price, EUR/t
DAIRY
2020 9-months results
Number of cows had decreased by 3% and was 3,449 by the end of $Q3$ .
Milk yield per cow increased by $6%$ .
Aged and inefective herd is being replaced in order to increase productivity.
The Group is increasing the herd (up to 3.6 thousand cows) in order to reach maximum capacity and efficiency.
The segment has become profitable and has a potential to improve its current results.
| 9M2020 | 9M2019 | Variance | FY2019 | |
|---|---|---|---|---|
| Total quantity of products sold, t | 19,828 | 19,144 | $+4%$ | 25,224 |
| Milk, t | 19,307 | 18,598 | $+4%$ | 24,492 |
| Cattle, t | 521 | 546 | $-5%$ | 732 |
| Revenue, EUR million | 8.17 | 7.63 | $+7%$ | 10.14 |
| Milk, EUR million | 7.62 | 4.81 | $+8%$ | 9.42 |
| Cattle, EUR million | 0.55 | 0.56 | $-3%$ | 0.72 |
| Cost of sales, EUR million | 7.79 | 7.64 | $+2%$ | 10.64 |
| Milk, EUR million | 7.24 | 7.07 | $+2%$ | 9.93 |
| Cattle, EUR million | 0.55 | 0.56 | $-3%$ | 0.72 |
| Revaluation of biological assets, EUR million |
(2.30) | (2.31) | $+0\%$ | (2.20) |
| Subsidies, EUR million | 1.96 | 1.66 | $+18%$ | 2.22 |
| Gross profit, EUR million | 0.04 | (0.65) | n/a | (0.47) |
Results by segment Mushroomrgrowing
MUSHROOM GROWING
Growing demand for packaged mushrooms increased average price and cost.
Negative effects:
- · due to COVID-19, sales of the mushrooms for catering have decreased as well as the sales of compost to export markets. Product mix is less favourable.
- exceptionally good season of forest mushrooms had decreased demand for grown mushrooms.
2020 9-months results
The segment demonstrates continuous growth.
| 9M2020 | 9M2019 | Variance | FY2019 | |
|---|---|---|---|---|
| Sold mushrooms, t | 9,652 | 9,013 | $+7%$ | 12,256 |
| Average price (Eur/t) | 2,231 | 2,107 | $+6\%$ | 2,147 |
| Total revenue, EUR million | 22.93 | 21.14 | $+8%$ | 28.71 |
| Mushroom sales revenue, EUR million |
21.53 | 19.27 | $+12%$ | 26.32 |
| Compost sales revenue, EUR million |
1.39 | 1.86 | $-25%$ | 2.39 |
| Cost of sale, EUR million | 21.55 | 12.75 | $+10%$ | 26.22 |
| Cost of mushrooms sold, EUR million |
20.30 | 11.68 | $+14%$ | 2.49 |
| Cost of compost sold, EUR million | 1.25 | 1.07 | $-29%$ | 23.73 |
| Gross profit, EUR million | 1.37 | 1.50 | $-9%$ | 2.49 |
FMCG
The main group of product remains unchanged: preserved mushrooms, vegetables and SOUPS.
Sales increased in all markets, with the largest impact coming from the U.S., Sweden and the Baltics.
Growth in all segments and regions
FMCG products are distributed to 28 countries (21 in 2019).
Revenue structure
| Country | sales % 9M2020 | Share of total lncrease in sales % 9M2020 |
|---|---|---|
| Lithuania | 32% | $+12\%$ |
| USA | 27% | +320% |
| Sweden | 9% | +361% |
| Japan | 5% | New market |
| Latvia | 5% | +89% |
| UAE | 4% | +13% |
| Denmark | 2% | New market |
| Australia | 2% | New market |
| Estonia | 2% | +80% |
| Ukraine | $1\%$ | New market |
| Poland | $1\%$ | New market |
| Other | 10% | 112% |
FMCG
2020 9-months results
Sales revenue almost doubled in the nine months of 2020.
Growth of sales and larger utilization of production capacities have positive impact on profitability of the segment.
The Group has capacity to increase production by more than twice without significant investments.
| 9M2020 | 9M2019 | Variance | FY2019 | |
|---|---|---|---|---|
| Revenue, EUR million | 3.36 | 1.83 | $+84%$ | 2.79 |
| Cost of goods sold, EUR million | 3.07 | 1.82 | $+60\%$ | 2.75 |
| Gross profit, EUR million | 0.29 | 0.01 | $+2,900\%$ | 0.05 |
Revenue dynamics, thous. EUR
Q32020
Financial information
Main factors for EBITDA increase
EBITDA increased by EUR 3.47 million.
Crop-growing segment had the biggest impact on the results.
Overview of the results
Positive developments allow to expect trend of growth to continue in Q4 2020.
Crop growing: 96% of Y2020 harvest is already in storage. 93% of the harvest is already contracted or sold. We expect positive results from sales of remaining uncontracted crops due to increasing prices of organic crops in recent months.
Dairy - Improving results will be further positively effected by improving quality of the herd and decreasing feed costs (average price of grass for feed will be lower due to better grass yields in 2020)
Mushrooms - Increasing production in difficult environment. Historically, Q4 is the highest season of the year
FMCG - Sales in October alone amounted to EUR 1.05 million.
- Agreements with Lithuanian branch of AS "Citadele banka", the branch of Luminor Bank AS and Swedbank, AB were signed.
- The banks will finance main operating companies of the Group.
Favorable conditions:
- Lower costs average margin of banks' loans had decreased by 0.8%,
- More flexibility and $\bullet$ opportunities for investments and expansion.
Refinancing of credits to banks
Strategic goal - to increase part of long-term liabilities.
| Before | After | |
|---|---|---|
| Refinanced/new credits, EUR million | 26.6 | 38.1 |
| LT loans maturity | 1-2 years | 5 years |
| ST loans maturity | 2020.12 | 1-3 years |
- Annual repayments in 2021:
- all long-term loans EUR 3.7 million,
- leasing EUR 3 million.
Effect on long term debt servicing
Strategic target - DSCR > 1,5 should be achieved.
The share price increased by 22.80% (from EUR 0.363 to EUR 0.446 per share) from the beginning of 2020 to 30 November 2020.
The average monthly turnover was EUR 0.35 million.
No 3 corporate bond turnover in Baltics. (annual turnover 1.8 MEUR up to 2020.11.30)
Share price information
AUGA group, AB share price on Nasdaq Vilnius, EUR
Valuation target price, EUR
* - Base case scenario
More information:
- Nasdaq Vilnius, Baltic Main List: AUG1L $\bullet$
- Nasdaq Vilnius, green bonds: AUGB060024A $\bullet$
- Information for investors, data in MS Excel format: $\bullet$ http://auga.lt/en/for-auga-investors/
- Analyst reports: http://auga.lt/en/for-auga-investors/analyst- $\bullet$ coverage/
- News for investors subscription: http://cutt.ly/auga $\bullet$
- Investor relations: $\bullet$
Mindaugas Ambrasas, CFO +370 620 67296 [email protected]
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