KTG Agrar shows strong performance in H1
Company benefits from low fertiliser and fuel prices
- Total output rises 28.0 percent to EUR 26.3 million
- EBIT up 57.6 percent and net income up 72.0 percent
- Farmland expanded by around 7,700 ha to around 29,200 ha
- Further earnings growth planned for H2
Hamburg, 31 August 2009 – KTG Agrar AG [ISIN: DE000A0DN1J4], a leading agricultural company in Europe, is on the growth track – the company has clearly boosted its total output and earnings and expanded its farmland. In the first half of 2009, KTG Agrar increased its total output by 28.0 percent to EUR 26.3 million and reported disproportionate growth in all earnings figures. Earnings before interest and taxes (EBIT) soared by 57.6 percent from EUR 2.4 million to EUR 3.8 million. Net income for the period climbed by as much as 72.0 percent to EUR 1.8 million. “The first six months of the year are usually the weaker half for the agricultural sector,” says Siegfried Hofreiter, CEO of KTG Agrar. “In the second half of the year, we will make another strong leap, especially in earnings.”
The company also continued to expand its farmland, adding another 36.0 percent to bring the total size to around 29,200 hectares. In 2009 alone, KTG Agrar acquired two farms with a combined size of 3,700 hectares in Brandenburg. 750 hectares of these are owned by the company, while the rest is leased under long-term contracts. KTG Agrar specialises in agriculture and cultivates crop on around 23,500 hectares in east Germany as well as on 5,600 hectares in Lithuania, which is a full EU member. 17.7 percent of the farmland is owned by the company, up on the 17.2 percent reported at the end of June 2008. The successful performance in the first six months is also attributable to reductions in the cost of materials. In spite of the 7,700 ha increase in farmland, fertiliser and fuel costs rose by only 2.5 percent to EUR 7.5 million (H1 2008: EUR 7.3 million). This is due to the fact that KTG Agrar purchases large volumes and therefore benefits significantly from declining prices of input materials such as diesel, phosphorous and potash. In some cases, prices declined by over 40 percent in the past months, thus more than offsetting the decline in the prices of agricultural commodities. “We aim to achieve a stable margin in times of both low and high prices,” says Siegfried Hofreiter. “And we are successful at it.” At the six-month stage, the EBIT margin stood at 13.8 percent, up from 11.6 percent in the same period of the previous year.
The biogas segment has also performed well. With the twelfth plant taken into service at the beginning of the year, sales revenues rose from EUR 4.2 million to EUR 4.7 million in the reporting period. Construction of biogas plants at two new sites is scheduled to start shortly. As a result, production capacity will double by the year 2010. The company’s farmland is projected to pass the 30,000 ha mark before the end of the current fiscal year. This growth will pay off: KTG Agrar wants to increase its total output and earnings in 2009 and pay out the first dividend to its shareholders. The positive trend is expected to continue in 2010. “The fact that we can today project an increase in both total output and earnings for the next fiscal year shows that we are on the right track,” says Siegfried Hofreiter.