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AUGA group Investor Presentation 2022
2259_rns_2022-12-06_9cbba926-5eea-42bf-9b70-8027c73298d6.pdf
Investor Presentation
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PRESENTATION ON THE FINANCIAL RESULTS FOR 9 MONTHS OF 2022
PRESENTED BY
Mindaugas Ambrasas
CFO
AUGA GROUP AT A GLANCE*
The largest vertically integrated organic food producer in Europe
Founded in Listed on
business segments
th. ha
employees of arable land
million EUR
revenue
%
of sales is export
Products are sold in
countries
9M2022 *Audited financial results, 2021
Operating results had improved
Financial data for 9 months tentatively reflect the result of 2022.
The group had rebounded from very difficult Y2021, the results are in line with Y2020 despite difficult environment.
| EUR million | 2022 9M |
2021 9M |
Variance | 2020 9M |
|---|---|---|---|---|
| Revenue | 57.71 | 54.90 | +5% | 62.38 |
| Gross profit | 13.14 | 1.70 | +673% | 11.88 |
| Net profit | (0.62) | (10.43) | +94% | 0.44 |
| EBITDA | 16.78 | 5.45 | +208% | 15.94 |
Results by segment Crop growing
CROP GROWING
Crop growing results had improved significantly YoY
Wheat and legumes account for 61% of cash crops' land plot.
Yields had improved, but overall results were lowered by poor yields of summer wheat and peas.
Overall costs has increased 18% YoY.
Significant growth of average selling price was affected not only by prices, but quality of the harvest as well.
| Wheat | 2021/2022 | 2020/2021 | Variance |
|---|---|---|---|
| Area, ha | 11,693 | 10,440 | +12% |
| Yield, t/ha | 3.41 | 3.29 | +4% |
| Price, Eur/t |
402 | 240 | +68% |
| Cost, Eur/ha |
991 | 762 | +30% |
| Profit, Eur/ha |
380 | 28 | +1257% |
| Legumes | 2021/2022 | 2020/2021 | Variance |
|---|---|---|---|
| Area, ha | 6,785 | 8,056 | -16% |
| Yield, t/ha | 2.32 | 1.10 | +111% |
| Price, Eur/t |
576 | 347 | +66% |
| Cost, Eur/ha |
830 | 829 | 0% |
| Profit, Eur/ha |
506 | (448) | n/a |
CROP GROWING
As for 30.11.2022, the group contracted 90% of forecasted 2022 harvest.
Harvest of 2022 is contracted with 48% higher prices than the harvest of 2021 (excluding long term agreements).
Organic feed crops are in high demand and support food crops' prices.
Market trends: prices were slightly decreasing lately, significant growth YoY
100 € 150 € 200 € 250 € 300 € 350 € 400 € 450 € 500 € 550 € 600 € Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2020 2021 2022 Organic wheat (food) Organic wheat (feed) Conventional wheat (food) Conventional wheat (feed)
*Germany, the largest EU market, is a benchmark for major organic product prices.
Organic vs. Conventional wheat price in Germany*, EUR/t
Source: www.ami-informiert.de, https://www.bmel-statistik.de/
CROP GROWING Q3 results have the highest volatility historically
Negative developments in Q3 due to weather conditions mainly: cold, rainy weather and heavy winds had decreased the harvest.
Autumn sowing is successfully completed.
Q4 results will be mainly affected by forecasted gain (loss) of next year's harvest.
Gain (loss) on initial recognition of biological asset at fair value, €'000
CROP GROWING 2022 9M results
Significant improvement YoY
| u C | |
|---|---|
| പ്രവ |
| 2022 9M | 2021 9M | Variance | 2020 9M | |
|---|---|---|---|---|
| Total cultivated land, ha | 38,525 | 39,139 | -2% | 39,637 |
| EUR million | 2022 9M | 2021 9M | Variance | 2020 9M |
| Total gain (loss) on revaluation of biological assets (crops) |
8.20 | (1.35) | n/a | 7.94 |
| Gain (loss) on revaluation of biological assets (crops) recognized in previous period |
2.33 | 2.02 | +15% | 1.45 |
| Gain (loss) on revaluation of biological assets (crops) recognized in current period |
5.86 | (3.37) | n/a | 6.49 |
| Sales revenue | 18.71 | 18.41 | +2% | 26.21 |
| Cost of sales | (17.73) | (20.13) | -12% | (27.16) |
| Inventory write-offs | (0.95) | (2.38) | -60% | (0.98) |
| Result of internal transactions | (1.00) | - | n/a | - |
| 9 Result of sales of agricultural produce |
(0.96) | (4.10) | +77% | (1.93) |
| Subsidies | 7.06 | 6.98 | +1% | 5.57 |
| Gross profit | 11.96 | (0.50) | n/a | 10.13 |
25% of the harvest sold in Q3 (44% in Q3Y2021).
Improvement in sales result due to lower write-offs, favorable market development.
Results by segment Dairy
7
DAIRY Milk yield and price dynamics
In 9M of 2022 milk yields fell by 2% YoY. Decision by the group: due to poor last year's harvest, there was a lack of feed ingredients. Issue to be resolved after new harvest.
Average milk price has increased by 33% since the beginning of 2022.
9M2022 11 Source: www.ami-informiert.de , https://www.bmel-statistik.de/ ,https://ec.europa.eu/agriculture/market-observatory/milk
DAIRY 2022 9M results
High prices are main driver for improving profitability.
| 2022 9M | 2021 9M | Variance | 2020 9M | |
|---|---|---|---|---|
| Total quantity of products sold, t |
20,249 | 20,168 | 0% | 20,387 |
| Milk | 19,305 | 19,112 | +1% | 19,307 |
| Milk commodities | 332 | 502 | -34% | 559 |
| Cattle | 612 | 554 | +10% | 521 |
| EUR million | 2022 9M | 2021 9M | Variance | 2020 9M |
| Revenue | 12.32 | 10.16 | +21% | 9.87 |
| Milk | 10.01 | 7.89 | +27% | 7.63 |
| Milk commodities | 1.26 | 1.62 | -22% | 1.69 |
| Cattle | 1.04 | 0.65 | +60% | 0.55 |
| Cost of sales | (11.02) | (9.87) | +12% | (9.45) |
| Milk | (8.76) | (7.72) | +13% | (7.25) |
| Milk commodities | (1.22) | (1.50) | -19% | (1.65) |
| Cattle | (1.04) | (0.65) | +60% | (0.55) |
| Revaluation of biological assets | (1.77) | (2.48) | -29% | (2.31) |
| Subsidies | 2.14 | 2.36 | -9% | 1.97 |
| Gross profit | 1.67 | 0.17 | 882% | 0.08 |
As for 30.09.2022 group's herd consists of 3,479 cows and 3,340 heifers and bulls, compared to 3,494 cows and 3,040 heifers and bulls a year before.
Improving profitability: average milk price grew by 26% while costs increased by 12% only.
Results by segment Mushroom growing
MUSHROOM GROWING
3 key drivers: costs, prices, production volume
Soaring energy prices severely impacted result of the segment in Q3. Transportation costs grew by 24%, energy costs almost tripled.
Price of mushrooms excluding transport and packaging was 8% higher in Q3 compared to Q1.
Production volume not optimal due to saving energy resources and management of production challenges.
1,998 2,123 2,164 1,800 2,000 2,200 2,400 Price of mushrooms (excl. transport and packaging), Eur/tonne Q1 Q2 Q3
MUSHROOM GROWING
2022 9M results
Negative result affected by growing energy costs.
| 2022 9M | 2021 9M | Variance | 2020 9M | |
|---|---|---|---|---|
| Sold mushrooms, t | 8,834 | 9,072 | -3% | 9,652 |
| Average price (Eur/t) | 2,359 | 2,326 | +1% | 2,231 |
| EUR million | 2022 9M | 2021 9M | Variance | 2020 9M |
| Total revenue | 21.17 | 21.46 | -1% | 22.94 |
| Mushroom sales revenue | 20.84 | 21.10 | -1% | 21.54 |
| Compost sales revenue | 0.33 | 0.36 | -8% | 1.40 |
| Cost of sale | (22.68) | (20.90) | +9% | (21.55) |
| Cost of mushrooms sold | (22.35) | (20.71) | +8% | (20.30) |
| Cost of compost sold | (0.33) | (0.20) | +66% | (1.25) |
| Gross profit | (1.51) | 0.56 | n/a | 1.38 |
Short term solutions:
- Production volume should reach 1000 t/month;
- continuous negotiations for price review;
- energy consumption control (had decreases by 20-24% YoY);
- energy consumption is lower in colder seasons.
Long term solutions:
- investments into renewable energy production;
- biomethane production projects currently developed by the group.
Positive tendencies in the 3rd quarter. 2022 9M results
Inflation and logistic disruptions create challenges for projects in export markets – growth of sales had stalled in H1.
The 3rd quarter as sales reached EUR 2.78 million (+21% YoY).
Profitability back on track due to:
- high utilization of production capacities;
- review of pricing.
| EUR million | 2022 9M | 2021 9M | Variance | 2020 9M |
|---|---|---|---|---|
| Revenue | 5.50 | 4.88 | +13% | 3.37 |
| Cost of goods sold | (4.49) | (3.41) | +32% | (3.08) |
| Gross profit | 1.01 | 1.47 | -31% | 0.29 |
RESULTS Main factors for EBITDA change
Crop growing and Dairy segments have the largest positive affect.
OTHER INFORMATION 3 projects to be implemented / further developed in 2022
| Project | Plan | Status |
|---|---|---|
| Biomethane infrastructure | The group is planning to operate 3 facilities by Q4 2022. | Work on the infrastructure will be completed and biomethane production will start at the beginning of 2023. Theoretical annual production volume of 3 facilities - 63 000 MWH of biomethane |
| Specialized feed technology | First prototype is already built and is in testing currently. Two main targets: a) improved milk yields, b) reduction of CO2 e emissions. The group is planning to start scaling of technology in it's farms if tests will be successful. |
Testing phase. Further development of technology. |
| AUGA M1 tractor |
The group is aiming to have up to 10 tractors working in group's fields by Q4 2022. Agreement for assembling is already signed. |
Production in progress. First batch of 3 tractors should be completed in Q4. |
Share price information OTHER INFORMATION
The share price decreased by 20% (from EUR 0.503 to EUR 0.401 per share) from the beginning of 2022 to 30th of November 2022. OMX Baltic Benchmark GI decreased by 14% during the same period.
The average monthly turnover was EUR 0.18 million.
Valuation target price, EUR 0.56* 0.61-0.71 0.70 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 2014.01.01 2015.01.01 2016.01.01 2017.01.01 2018.01.01 2019.01.01 2020.01.01 2021.01.01 2022.01.01 AUGA group OMX_Baltic_Benchmark_GI
AUGA group, AB share price on Nasdaq Vilnius, EUR
* - Base case scenario
More information:
- Nasdaq Vilnius, Baltic Main List: AUG1L
- Nasdaq Vilnius, green bonds: AUGB060024A
- Information for investors: http://auga.lt/en/for-auga-investors
- Analyst reports, data in MS Excel format: https://auga.lt/en/investors/reportsand-presentations
- News for investors subscription: http://cutt.ly/auga
- Investor relations:
Mindaugas Ambrasas, CFO +370 620 67296 [email protected]
DISCLAIMER
The information on this presentation may contain certain forward-looking statements with respect to the financial condition, results of operations and business of the Company and certain of the plans and objectives of the Company with respect to these items. We caution that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. For these reasons, our actual future results may differ materially from the plans, goals, and expectations set forth in such forward-looking statements.
Unless required by law, the Company assumes no obligation to update or revise any forward-looking statement after the disclosure of this presentation.
