Ekosem-Agrar earnings grow for the first nine months of 2020
In the period from January to September 2020, the company collected a total of roughly 685,000 tons of raw milk. The average daily raw milk output in the first nine months of the financial year amounted to around 2,500 tons. For the first time, the total herd exceeded 200,000 animals – a 10% increase compared to the beginning of the year.
Due to the coronavirus pandemic, global milk prices declined in the second quarter of 2020, as the hospitality sector, usually one of the main purchasers of dairy products, virtually ceased to operate in large parts of the world. As the year progressed, prices recovered, however, and the group ultimately achieved a higher raw milk price in the first nine months of the year than in the same period of the previous year.
In euros, the raw milk price was slightly below the previous year’s level due to the weakness of the ruble.
Total output (revenue plus changes in the balances of fall-plowed land and of agricultural produce and biological assets as well as other operating income) rose by approx. 19% to €477.7m ($580.8m) in the first nine months of 2020.
Earnings before interest, taxes, depreciation and amortization (EBITDA) grew to approximately €171.7m ($208.7m), up from €110.6m ($134.5m) the previous year, equivalent to an EBITDA margin of 35.9% (previous year: 27.6%).
Earnings before interest and taxes (EBIT) rose by 85% to €107.9m ($131.2m), which corresponds to an EBIT margin of 22.6% (previous year: 14.5%).
Stefan Duerr, Chairman of the management board of Ekosem-Agrar, said, “Earnings for the first nine months of 2020 show that we have performed quite well in the year to date. This year’s harvest was also good overall. Weather conditions in the Voronezh region were challenging, with a cool and humid spring and an extremely hot and dry summer, which led to good yields for summer crops but made the crops harvested later suffer from the drought in the summer. On the other hand, however, we recorded much higher yields in other regions, especially in Siberia.”
The management board said it currently expects total raw milk output to rise to between 900,000 and 940,000 tons in the financial year 2020. Revenues are expected to come in at between €480m ($583.5m) and €500m ($607.8m), while EBITDA and EBIT are projected to amount to between €165m ($200.6m) and €185m ($224.9m) and between €85m ($103.3m) and €105m ($127.6m), respectively.
In response to the negative equity situation of Ekosem-Agrar AG reported in May 2020, a reorganization has led to a realization of hidden reserves in the book value of a subsidiary, with the result that the equity capital of Ekosem-Agrar AG now exceeds the share capital.