Ekosem-Agrar AG sees half-year sales rise by a third

By Jim Cornall

- Last updated on GMT

The board said it is embarking on the process for the development of a sustainability strategy. Pic: Ekosem-Agrar
The board said it is embarking on the process for the development of a sustainability strategy. Pic: Ekosem-Agrar

Related tags Ekosem-Agrar Russia

Ekosem-Agrar AG, the German holding company of Russian milk producer EkoNiva Group, generated sales revenues of €209m ($243m) in the first half of 2020, up 33% on the same period of the previous year.

At about 456,000 tons, raw milk production was up 30% on the previous year’s 352,000 tons. Sales of raw milk remain the most important sales driver at 73.5% or €153.6m/$178.9m (previous year: €111.5m/$129.8m).

Milk processing contributed €20.1m ($23.4m), or almost 10% to total sales revenues. Sales of agricultural products amounted to €17.9m ($20.8m), and revenues from livestock and animal products reached €13.1m/$15.3m (previous year: €8.7m/$10.1m).

Daily milk output rose by 7% to 2,567 tons as of June 30, 2020. The company expanded the area of land controlled by it from about 599,000 hectares to about 631,000 hectares in the reporting period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 50% to €132.8m ($154.6m), with the EBITDA margin (EBITDA as a percentage of total output) at 39.5%. The operating result (EBIT) also improved by 57% to €89.2m ($103.9m). The EBIT margin (EBIT as a percentage of total output) stood at 26.5%. Net profit for the period rose by 65% to €38.3m ($44.6m) in the reporting period.

At €2.2bn ($2.56bn) as of June 30, 2020, total assets were almost at the same level as at the end of 2019. Financial liabilities including leasing liabilities totaled €1.2bn ($1.4bn).

Stefan Duerr, chairman of the management board of Ekosem-Agrar AG, said, “All in all, we are very satisfied with our performance in the first six months of 2020. Against the background of major economic uncertainties in connection with the coronavirus pandemic, our company and our industry have demonstrated to be crisis-proof. Our expansion course remains intact, although we have slowed down the pace somewhat in recent months.”

The management board said it expects the dairy herd to increase to approximately 105,000 animals by the end of 2020. The volume of raw milk produced is expected to rise to between 900,000 tons and 940,000 tons, and the volume of raw milk processed into dairy products by the company itself is expected to amount to between 85,000 tons and 90,000 tons.

Based on these operating figures, which the company said are slightly below the original plan, the board expects sales revenues of €480m ($559m) to €500m ($582m), EBITDA of €165m ($192m) to €185m ($215.4m) and EBIT of €85m ($99m) to €105m ($122m) for the fiscal year 2020.

In August 2020, the company reached a first milestone in the export of dairy products with the start of sales of EkoNiva UHT milk in China, as 22.5 tons of ultra-pasteurized milk were sold in three cities in the Heilongjiang province, which borders Russia.

The board has also started the process for the development of a sustainability strategy. The aim of the project is to define specific sustainability goals and measures, the implementation and progress of which is to be regularly and transparently reported going forward.

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