KTG Agrar reports significant increase in 2007 operating result
Positive trend underpinned by strong demand for agricultural commodities
- Total output rises 67 percent to EUR 30 million
- EBIT increases 60 percent to EUR four million
- Strong growth planned for 2008
Hamburg, April 28, 2008 – KTG Agrar AG (ISIN: DE000A0DN1J4) achieved strong growth in 2007 and consolidated its position as a leading European producer of agricultural commodities. According to preliminary figures, total output was up 67 percent from EUR 18 million to approximately EUR 30 million. The operating result (EBIT) rose from EUR 2.5 million to approximately EUR 4 million (HGB reporting, before IPO costs). This represents an increase by some 60 percent. At the same time the KTG Group expanded its cultivable land by almost 30 percent to approximately 17,500 hectares. The percentage of owned land was raised from 13.8 percent to 15 percent.
Siegfried Hofreiter, CEO of KTG Agrar, said: “We are highly pleased with the development in 2007. We not only grew our operations profitably but have also reached a number of important strategic milestones which will have a very positive effect on the KTG Group’s development going forward. We have used the IPO proceeds to optimise our capital structure and have laid the foundation for continued dynamic growth.” Being a leading producer of ecological and high-quality market produce such as grain, corn and rape, KTG Agrar has benefited from rising demand in Germany, in particular.
Global demand for agricultural commodities once again exceeded supplies in 2007. This development has been driven by a number of sustained trends, including the annual increase in the world’s population by 80 million people. In addition, economic growth in the developing and emerging nations has been accompanied by a clear increase in meat consumption, resulting in greater demand for animal fodder; for example, it takes seven kilograms of grain to produce one kilogram of beef. Limiting factors on the supply side include climate change and the fact that arable land is lost as a result on ongoing industrialisation. The US Department of Agriculture estimates that the 2007/2008 grain harvest of 606.7 million tons will contrast with a consumption of 619 million tons. Being Europe’s largest organic farmer, KTG Agrar has also benefited from the ongoing boom in organic foods.
The company’s energy production operations also developed positively last year. Rated for a total capacity of 6.5 megawatts, all ten biogas plants have been connected to the grid since November 2007. Despite the phased connection programme, revenues of more than EUR four million were realised already in 2007. “Biogas production offers us numerous advantages. For one thing, it generates dependable revenues and supports high margins. In addition, we can use the fermentation residues as organic fertiliser, which clearly boosts our harvest of marketable organic produce. This is what we call modern agricultural management.” In 2007 the share of land used for biogas production was clearly below 20 percent of the company’s total land. In the future KTG Agrar will increasingly rely on so-called intercrops for biogas production. This means, for example, that millet is grown for biogas production only after the winter rye has been harvested for food production.
KTG Agrar plans to continue its dynamic growth in the coming years. Says Siegfried Hofreiter: “Agriculture is a market with a promising future and we see considerable growth potential both in organic and conventional farming, with prices remaining at a high and stable level.” The company consequently expects to report another clear increase in total output and a disproportionate improvement in its operating result. The total land holdings are to be expanded to more than 22,500 hectares.