AUGA group results for the first half of the year inspire optimism
In the investor conference webinar on September 3, 2019, Kęstutis Juščius, CEO of AUGA group, said he believed that the improving results in all operating segments of the company allow to expect successful second half of this year.
During the first two quarters of this year the company improved sales in the crop growing segment, increased the volume of milk sold at organic prices and significantly expanded the export geography of end-consumer packaged products.
During the first six months of 2019, the sales revenue of AUGA group, AB and its subsidiaries amounted to EUR 28.84 million, a 15% increase compared to the same period of 2018, when it was EUR 25.01 million.
The Group’s gross profit for the first half of 2019 amounted to EUR 7.34 million and was EUR 3.05 million higher compared to the same period of 2018 (gross profit for the first half of 2018 - EUR 4.29 million).
During the first six months period of 2019, the Group earned EUR 0.34 million net profit compared to EUR 0.48 million a year earlier.
The Group’s EBITDA for the first six months of 2019 amounted to EUR 6.28 million. During the same period in 2018 the Group’s EBITDA reached EUR 4.10 million.
Crop growing segment sales revenue for the half-year of 2019 amounted to EUR 8.78 million compared to EUR 7.60 million for the same period in 2018 (15% increase).
„Our operations, what we do on the farms, have improved season by season. The farming will continue to improve, it will be stronger and more profitable under normal weather conditions.”, says K. Juščius.
According to him, every year the farms operate more efficiently and implement new farming technologies.
In July and August, the weather conditions were good, so the company harvested grain quite early and was able to properly prepare the soil for next year's grain sowing.
“It is important to mention that we are improving the crop split to be less dependent on weather conditions. I believe, the company can perform better on the same conditions every year”, claims K. Juščius.
K. Juščius sees a lot of potential in the dairy segment. To date, the company has sold a large portion of its organic milk at conventional prices due to low demand, but the situation is changing rapidly.
“This is actually our trend to increase the share of sales of organic milk and it is still going up. During the last months the proportion of organic milk sales is higher than before, and in the third quarter probably the numbers will be even better than in the second”, says the company's CEO.
The volume share of milk sold at organic production prices was around 64% in the first half of 2019 compared to 31% in the same period of 2018.
The company aims to expand the geography of organic dairy trade. One of the main markets where the company sees the most opportunities for organic milk is China.
“In order to sell milk on the Chinese market, you need to certify the entire production cycle from farms to processing facilities. The company has already started the certification process, and we expect to complete it in the third quarter of this year. Then we will open a gate to sell organic milk at premium organic prices in China. This certification process will help our company to sell all our milk as organic in the future”, says the CEO of the company.
Total revenues of end-consumer packaged goods segment amounted to EUR 1.053 million during the first six months of 2019 compared to EUR 0.57 million a year earlier. The surge in sales of these products was driven by a significant expansion of export geography.
“The end-user product segment is the smallest in the company, but it is growing fast. We also see the highest growth in this segment in the next season”, says K. Juščius.
The company continues to develop investment projects, one of which is the combined feedstock production plant. To develop this project the company uses the capital successfully raised during the secondary public offering of shares last year.
“This is our priority for the coming year. The company will launch a new combined feedstock plant to produce feed for dairy and poultry farms. We use investments attracted last year. This gives us the opportunity not only to produce feed for our own farms but also to export it”, says the company's CEO.
The full recording of investor conference webinar can be viewed here: https://bit.ly/2kuoypd