KTG Agrar benefiting from rising prices of agricultural commodities
- Half-year results: EBIT up 21.3%, total output up 3.8%
- High prices overcompensate for lower harvest volumes
- Strong growth in the upcoming years
Hamburg, 30 August 2010 – The course of 2010 has impressively shown just how important food security and CO2reduction are. 2010 will see less agricultural commodities being harvested than are consumed. This prospect has driven up the prices of wheat etc. by more than 50 percent since the beginning of the year. Beneficiaries of this trend include KTG Agrar AG (ISIN: DE000A0DN1J4). The German agricultural company grows organic food crops as well as conventional grain, maize and rapeseed on more than 30,000 hectares of farmland. Only last Thursday the International Grains Council lowered its global wheat harvest forecast to 644 million tons, following on from several downward revisions issued during the course of the year. The grain consumption estimate now stands 657 million tons significantly above the production. Siegfried Hofreiter, CEO of KTG Agrar, says: “The year 2010 shows that the two mega trends influencing our industry, namely worldwide population growth and climate change are sustainable.”
In the first half of 2010 KTG increased its total output to EUR 27.3 million, up 3.8 percent on the prior year’s period. Earnings rose ahead of revenues on all levels. Earnings before interest and taxes climbed by 21.3 percent to EUR 4.6 million. Consolidated net income rose to EUR 2.1 million, up 15.4 percent, even though in this industry the first half of a year is typically the weaker half. This is because the major costs incurred in the cultivation of food crops occur during the first months of a year while sales revenues and earnings, in particular, are generated only in the second half of a year. First-half sales revenues in the biogas segment, the company’s third core business segment, advanced by 38.4 percent from EUR 4.7 million to EUR 6.5 million.
High prices will more than compensate for the lower harvest
KTG Agar is optimistic about the 2010 harvest season. 28 giant harvester and field chopper harvest grain, maize, rapeseed and input materials for the biogas production. Ulf Hammerich, Board member in charge of KTG Agrar AG's agricultural activities, comments: “With sales prices up more than 30 percent on the previous year, the approximately ten percent decline in the harvest volume can be compensated very good.”
Full biogas project pipeline
KTG Agrar remains on the growth track, with the biogas segment increasingly emerging as its third important pillar. Back in 2007 the company started up its first biogas plant and meanwhile has 15 modern plants with a total combined capacity of approximately eleven megawatts hooked up to the grid. This capacity is to be expanded significantly in coming years. A 3.2 megawatt plant in Seelow in the state of Brandenburg is under construction. Moreover, the company has identified numerous additional locations and commenced project development for these sites in recent months. Dr. Thomas R.G. Berger, KTG Board member in charge of the biogas activities, says: “We have a full pipeline and these projects will be moved forward energetically. As a result, our biogas revenues will more than double to more than EUR 30 million in the coming years.” The company’s plans also provide for a steady expansion of its farmland. Today, with 5,700 hectares about 18.5 percent of the total farmland is owned by KTG Agrar. While the remaining 24,800 hectares are long-term leased. In order to profit even more from rising farmland prices, the share owned land will be further expanded in the upcoming years.
KTG Agrar’s outlook on the future is consequently upbeat. The famland growth of the past years is paying off. Says Siegfried Hofreiter: “We will once again achieve a year-on-year increase in our 2010 total output and earnings.” All core business segments will contribute to this growth. In addition, the company has started to lock in the current attractive price levels for the 2011 season through advance sales at fixed contract prices while the bulk of the required fertilisers has already been procured and stored.
About KTG Agrar:
With cultivable land of more than 30,000 hectares, KTG Agrar AG is one of the leading producers of agricultural commodities in Europe. The Hamburg-based company’s core area of expertise is the organic and traditional cultivation of market products such as cereals, maize and rapeseed. For organic market products KTG Agrar is the european market leader. The company mainly produces in Germany but has also operated production in the EU full member state of Lithuania since 2005. The third mainstay the production of bioenergy. At present, KTG Agrar operates biogas plants with a total capacity of around eleven megawatts. In the year 2009, KTG achieved a total output of EUR 59,7 million and EBIT of EUR 9.2 million. Since November 2007 the company is listed on the Frankfurt Stock Exchange and currently mote than 200 employees. Further information can be found at www.ktg.ag.
Contact:
Investor Relations / Press
Fabian Lorenz
IR.on AG
Tel: +49 221 914097 - 6
E-Mail: fabian.lorenz@ir-on.com