Three months of AB Akola Group: food sector has overtaken agribusiness

The consolidated revenues for the three months of the financial year 2024/2025 of the AB Akola Group and its controlled companies (the Group) exceeded EUR 384 million and were 9% lower than in the corresponding period of the previous year.

The group sold 729 thousand tons of various products, down 5% compared to the same period last year.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months amounted to EUR 27 million, 17% lower than in the previous year. Net profit fell by 27% to EUR 13 million.

	2023/2024 3 months	2024/2025 3 months	2024/2025 compared to 2023/2024, %
Total trading volume, tons	765,179	729,277	(5)
Revenues, thousands of EUR	420,726	384,091	(9)
Gross profit, thousands of EUR	51,147	44,095	(14)
EBITDA, thousands of EUR	32,501	27,009	(17)
Operating profit, thousands of EUR	24,803	18,824	(24)
Net profit, thousands of EUR	17,510	12,743	(27)

“The decrease in sales volumes was mainly due to a decrease in sales of canola, corn, vegetable oil and other raw materials for animal feed. All but one operating segment posted lower revenues. The largest operating segment, ‘Partners for Farmers’ saw the largest contraction of 14.6%. Only the “Food production” segment registered an increase of 7%. profitable, and the food sector was more profitable than agriculture-related businesses”, said Mažvydas Šileika, Chief Financial Officer of the Akola Group.

The Farmer Partners segment generated revenues of over EUR 283 million and accounted for 74% of the Group’s total revenues for the reporting period. The segment’s gross profit was EUR 22.5 million and operating profit was EUR 8.8 million.

“Preliminary data shows that the 2024 grain harvest in the Baltic States will be 12 million tonnes, 5% higher than in 2023, including 7.2 million tonnes in Lithuania, our primary grain supply market. During the reporting period, we bought 3% less grain and canola than last year, including 7% less grain handled by our grain elevators compared to the previous year. Most of the purchases were second grade wheat with very little additional quality wheat. Grain transaction prices were 20% lower than last year. Down 13% from the previous year, with a 28% drop in revenue and an 88% drop in gross profit With the promise of a better global harvest for grains and oilseeds, price pressures are likely to continue,” he said M. Šileika.

Raw materials and feed additives were sold 11% less, or 120 thousand tons. Compound feeds and premixes were almost 2% higher than last year, with production lines operating at full capacity. Sales of these products were up nearly 13% over the previous year, but total revenue from sales of feed, feed materials and premixes fell 9% due to market pressure on prices. The gross profit of the feed business was reduced by 14% due to bottlenecks in transport logistics in Ukraine.

The Group’s revenue from certified seeds, fertilizers and plant protection products fell by 2% to EUR 85 million.

“We sold 8.5% more fertilizers, 88% more plant protection products and micronutrients, and the same volume of seeds as in the same period last year. However, prices were lower than last year due to the still unimproved situation of farmers, so the total income of these product categories decreased by 2%, and the gross profit by almost 9%,” said M. Šileika.

The farm machinery and equipment market continued to decline due to low farm gate prices and increased borrowing costs. Group revenue from sales, rental and various services of agricultural and agricultural machinery and equipment amounted to EUR 23 million, a decrease of 17%, while gross profit from these activities decreased by 19% to EUR 4 million EUR.

“We are seeing a trend in the market towards cost savings. This is not only in eliminating planned machine purchases, but also in reducing planned machine inspections. EU support programs are encouraging for us and farmers, but their impact is felt only in the second half. of the financial year, in an environment where farmers can no longer afford to buy machinery, our business model is also undergoing a significant change, with rental income doubling from a year ago. Due to the intense competition in the car rental sector, we have expanded our range of services to include less frequent services. We believe in the prospect of this as there will always be farms that do not meet the criteria for EU support, and it is becoming increasingly difficult for farms to find skilled machinery operators as young people are no longer willing to work in this field,” said M. Šileika about current trends in the agricultural sector.

The revenues of the “Food Production” segment, which represented 28% of the Group’s total revenues, exceeded EUR 107 million. The gross profit of this business was almost EUR 21 million and the operating profit was almost EUR 11 million.

“We always believed it would happen and it is happening – increasing profitability in the food segment is becoming a trend, increasing for the third year in a row. Sales of poultry and poultry products increased by 11%, revenues from the poultry business increased by 10%, and gross profit from this business increased by 58%. in revenues did not affect the gross profit of this activity, which increased by 1.6%. It is worth noting that the production of flour and baking mixes remained stable, while the production of breadcrumbs increased by 25%, but around 24% of this. used to produce intra-group chicken products Sales of instant food and ready-to-eat products also increased by 11%, with a 5% increase in revenue and a 4% increase. Gross Profit Start-up and testing of a new instant noodle plant in Alytus is underway in 2025. As the new breadcrumb plant will be operational in the spring, we will only see the full picture of growth. on the food segment in the next financial year,” said M. Šileika.

The revenues of the “Agriculture” segment, representing 3% of the Group’s total revenues, were EUR 11 million. The gross loss from this activity was EUR 0.1 million and the operating loss was EUR 1.5 million.

“At the end of the reporting period, our agricultural companies harvested the bulk of the crop – 87 thousand tons, down 4% from last year, as a dry summer affected the bean and pea harvests. Milk production was 9.8 thousand tons or 2. Agricultural income decreased by 11% due to lower market prices by 10-15%, while milk production income increased by 13% . 70% of the new harvest, but agriculture recorded a loss, as often happens in the first quarter of the year, due to the decrease in the cost of stocks sold in accordance with the Group’s accounting policy a gross profit 124% higher than in the same period last year, or EUR 0.7 million, milk prices were encouraging, up 10% compared to the same period last year,” said M. Šileika.

The “Other products and services” segment represented 1% of the Group’s revenues and amounted to EUR 5 million. Gross profit from this activity was EUR 0.96 million and operating profit was EUR 0.57 million.

“We sold 29% less pet food than last year, as much as it was produced – the goods are not stored in warehouses. The production facility operated at almost full capacity, and new products were developed to reduce production in the economy category. , which currently accounts for approximately 45% of the total As we focus on premium products, production volumes are decreasing due to production technology (8%), but the average basket price is increasing decreased by 19%, reducing gross profit, but gross operating margin declined very slightly year-on-year (from 19% to 17%), and the prospects for this business are attractive.

Veterinary pharmaceutical sales revenue increased 10%, mainly due to the growing small animal segment, while hygiene and pest control sales revenue increased 25% due to good one-off transactions,” said M. Šileika, about the most minor but promising segment. .

AB Akola Group owns the largest agricultural and food production group in the Baltic States, with more than 5 thousand employees. The group operates along the entire food production chain from field to fork, producing, preparing and marketing agricultural and food products, as well as providing goods and services to farmers. The financial year of the Group starts on 1 July.

More information:

AB Akola Group CFO Mažvydas Šileika
Mob. +370 619 19 403
Email [email protected]

Unaudited Consolidated Financial Statements and Consolidated Management Report of AB Akola Group for the three-month period ended 30 September 2024