Ekosem-Agrar AG sales revenues jump by more than 60%

By Jim Cornall

- Last updated on GMT

The group generated sales revenues of more than €400m ($433.3m) in the past fiscal year. Pic: Ekosem-Agrar
The group generated sales revenues of more than €400m ($433.3m) in the past fiscal year. Pic: Ekosem-Agrar

Related tags Ekosem-Agrar Russia Milk

Ekosem-Agrar AG, the German holding company of Russian milk producer EkoNiva Group, has published its results for the fiscal year 2019.

According to preliminary unaudited figures, the group generated sales revenues of more than €400m ($433.3m) in the past fiscal year, an increase of more than 60% compared to 2018.

Total output (revenue plus changes in the balances of fall-ploughed land and of agricultural produce and biological assets as well as other operating income) also rose to more than €560m ($606.6m), compared to €376.5m ($407.8m) in 2018.

Earnings before interest, taxes, depreciation and amortization (EBITDA) improved by more than 40% to more than €160m ($173.3m), equivalent to an EBITDA margin of about 30%.

The company said the trend is based on the ongoing expansion of the raw milk production segment in recent years, which accounts for just under two thirds of total earnings.

The positive trend in the price of raw milk also supported the strong increase in the group’s earnings. Milk processing, the youngest business segment, contributed around 10% to total sales revenues.

The focus in the segment was placed primarily on the development of EkoNiva, the group’s proprietary umbrella brand for dairy products.

Stefan Dürr, chairman of the management board of Ekosem-Agrar, said, “We are very satisfied with the development in the past financial year. In our core business of raw milk production, we have further expanded our leading position in the Russian dairy market and are now among the world’s top five producers.

We have barely been affected by the coronavirus crisis to date, even though the consequences for the economy as a whole are serious. As a systemically relevant agricultural enterprise and important producer of food, our operations are not affected by closures to ensure the supply of food to the population. We very much hope that the measures of the government to stabilize the economy will help quickly and contribute to maintain the purchasing power of the population.”

Ekosem-Agrar said growth has continued in 2020.  Compared to the first quarter of 2019, the share of sales generated by products of the own brand EkoNiva in the processing segment increased from 11% to 66% in first three months of 2020.

The presence of own dairy products in major retail chains also increased, with the result that sales more than quadrupled in the first quarter of the current year.

In the course of preparing the annual financial statements, the management board realized that the non-operating parent company Ekosem-Agrar AG had incurred a loss amounting to half of its registered share capital.

Wolfgang Bläsi, chief financial officer of Ekosem-Agrar, said, “We have already initiated measures to improve the equity situation at the holding company. The notification of the loss is a formal act that has no impact on the group’s capitalization and the liquidity situation of the holding company. As in previous years, the liquidity of the holding company is ensured by the operating subsidiaries in Russia.”