KTG Agrar expands arable land for agricultural resources by 1,500 hectares
Harvest insurance represents a milestone for the sector
Hamburg, 15 June 2009 – KTG Agrar AG (ISIN: DE000A0DN1J4) continues to expand its arable land. The Hamburg-based agricultural company has acquired another farm with roughly 1,500 hectares in Brandenburg. This brings the company’s total farmland to over 29,000 ha, which is already very close to the 30,000 ha target set for 2009/2010. “We are currently seeing very interesting growth opportunities in our core regions of east Germany and Lithuania,” says Siegfried Hofreiter, CEO of KTG Agrar, “and we will aggressively exploit these opportunities.”
The new farm has own land of approx. 250 ha and leased the remaining 1,250 ha under long-term contracts. In managing the new farmland, KTG Agrar will benefit from the fact that the new farm is located close to some of its existing locations. “This will enable us to take maximum advantage of the synergies of large-scale farming,” says Siegfried Hofreiter. Take the machines for example. The farmland not only enables the use of modern and large machinery, but it can also be used much longer. This way, the capacity utilisation of expensive harvesting machines can be increased by over 50%.
KTG Agrar wants to continue its profitable growth. In east Germany as well as Lithuania, the company benefits from long-standing experience. The KTG farms are firmly rooted in their respective regions and well known for their sustainable management. Moreover, the company has the necessary expertise for the successful restructuring of agricultural businesses and a large contact network. “We have been active in the market for 15 years and grown steadily throughout these years. This long history is highly appreciated by sellers and lessors,” explains Siegfried Hofreiter. Today already, KTG Agrar is among the largest agricultural companies in Europe. Going forward, the company will continue to focus on its three core competencies, i.e. ecological and conventional farming of food crops such as grain, maize and rapeseed, as well as the production of biogas and acquire and lease farmland. Additional regions in Eastern Europe are also interesting for the company. In addition, KTG Agrar plans to expand its biogas operations. In the past fiscal year, the company’s ten biogas plants with a combined electrical output of 7 MW generated sales revenues of EUR 9.1 million. This amount is expected to be doubled by the year 2010.
It is not only the reliable revenues and earnings from the production of biogas that contribute to the success of KTG Agrar but also the steady cash flows, which give the company the flexibility it needs to sell its food crops. While most of the harvest of the year 2008 was contracted at high prices already at the beginning of the year, very little quantities have been sold in the first months of 2009. “We adopted a wait-and-see stance at the beginning of the year and have begun to sell larger quantities of the 2009 harvest only in recent weeks, when demand and prices picked up noticeably,“ explains CFO Wolfgang Bläsi. “We owe this great flexibility to the income from the sale of the electricity we produce.” With fewer crops sown worldwide and lower harvests expected as a result, prices at the leading commodity exchanges are likely to rise also in the coming months.
“In May we took out balance sheet protection insurance with a renowned insurer. This is a milestone in the history of our company,” says Wolfgang Bläsi. The insurance covers the complete farmland of the KTG Group against crop failures due to dryness up to an insured amount of EUR 20 million. “This insurance once again shows that KTG is the innovation driver of the agricultural sector.”