KTG Agrar reports promising start to 2009 harvest season
- Company expects stable margin
- 50,000 tons of high-quality grain for the Middle East
Hamburg, 28 July 2009 – The 2009 harvest season has been off to a promising start. Now all we need is a few more days of dry weather and we will be looking at a very satisfactory result. Siegfried Hofreiter, CEO of KTG Agrar AG, casts a satisfied glance across the fields. His agricultural company is a European leader in terms of total acreage and its employees are currently busy harvesting produce on some 29,000 hectares of farmland in Eastern Germany and Lithuania. On some 5,000 hectares organic grain has already been harvested. The rapeseed harvest is also in full swing. Following conventional grain, organic maize and conventional maize as well as sorghum will be harvested by October.
KTG Agrar expects to report an EBIT margin on par with last year’s strong margin of approximately 20 percent. A large part of the 2009 harvest was already sold at good prices. While the prices of agricultural commodities are now below the record highs recorded in the first half of 2008, this decline is mitigated by the fact that the costs of operatingmaterials such as fertilisers and diesel have come down as well. The latter account for two thirds of total costs in agricultural production. Prices of nitrogen and phosphate are currently down approximately 50 percent on 2008 levels. KTG Agrar expects year-on-year savings in the vicinity of one million euros on diesel alone. Siegfried Hofreiter comments: “Our purchasing and sales prices tend to develop very similarly, providing good planning certainty and stable margins for our business. What counts is getting the timing right and having the resources in place to wait and see for a while, if and when this appears warranted.”
Being one of the leading producers of agricultural commodities in Europe, KTG Agar harvests large quantities of organic and conventional produce including grain, corn and rapeseed. This position enables KTG Agrar to sell directly to such processors as mills and food manufacturers. In addition, the company has made inroads into another promising segment – international grain export. By November KTG Agar will supply 50,000 tons of high quality grain to a government agency in charge of purchasing in the Middle East. Says Siegfried Hofreiter: “We are glad to have fulfilled the high standards imposed by our new customer. Not many European producers are in a position to do this.” Going forward, KTG Agrar will continue to bid for international contracts put out to tender. The shipments will be comprised of both KTG Agrar’s grain and grain sourced from other producers. KTG Agrar intends to build on this trading arrangement to set up another lucrative business segment.