AB Akola Group Reports Increased Profits Amid Revenue Decline
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AB Akola Group Financial Overview
The consolidated revenue of AB Akola Group and its controlled companies for the twelve months of the financial year 2023/2024 exceeded EUR 1,506 million, representing a 25% decrease compared to the previous year. The Group sold 3,025 thousand tons of various products, an 18% decline from the same period last year.
Financial Performance Highlights
Consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) for the twelve months amounted to EUR 75 million, which is 11% higher than last year. Net profit rose by 27% to EUR 26 million.
Fourth Quarter Insights
The consolidated revenue for the fourth quarter of the financial year dropped from EUR 499 million to EUR 382 million. However, the gross profit for this quarter increased from EUR 25 million to EUR 48 million, with operating profit rising from EUR 1 million to EUR 22 million and net profit reaching EUR 17 million, in contrast to a net loss of EUR 4 million a year earlier.
Challenges and Strategic Decisions
The decline in revenue is primarily due to falling market prices, while the decrease in volumes stems from a strategic shift towards higher profitability by circumventing less profitable transactions. Despite the revenue downturn, two major segments - Partners for Farmers and Food Production - achieved comparable operating profits of EUR 21 million each. The largest segment, Partners for Farmers, experienced the most significant revenue contraction, yet all segments faced declining revenues and profits. Notable exceptions include the fertilizer trade, poultry business, milk production, and instant food sectors, which reported higher gross profits amidst falling revenues.
Segment Performance Breakdown
The merger of the two business segments into Partners for Farmers generated EUR 1,137 million in revenue, accounting for 75% of the Group's total revenue with a gross profit of EUR 82.6 million.
In aggregate, the Group purchased 34% less grain while acquiring 12% more rapeseed. Marketing lower-quality grain has presented challenges, with sales of cereals and oilseeds plummeting by 30%, leading to a 48% decrease in revenue. Sales of raw feed materials were stable at 553 thousand tons but faced lower pricing due to competition. Overall, sales of feeds and raw materials experienced a 20% reduction.
Future Prospects and Investments
Revenue from certified seeds, fertilizers, and plant protection products decreased by 20% to EUR 246 million. Nevertheless, the seed supply segment remains promising, with the Dotnuva seed factory surpassing production expectations. A second seed factory is planned in Latvia, set to start operations in mid-2025, reflecting a commitment to future growth.
Fertilizer sales volumes exceeded last year's but revenue fell due to lower market prices, while gross profit improved dramatically compared to the previous year. Despite challenges from competitive pressures and price drops for plant protection products, there remains an optimistic outlook for the upcoming financial periods due to systematic investments and strategic shifts within the business.
Operational Overview
AB Akola Group operates as the largest agricultural and food production entity in the Baltics, employing 4,900 people and engaging across the full food production chain. With a financial year commencing on July 1, the group is strategically positioned for adaptive management in changing market conditions, focusing on enhancing value for farmers and ensuring profitability across all sectors.
Frequently Asked Questions
What led to the decline in AB Akola Group's revenue?
The decline is attributed to falling market prices and a strategic focus on higher profitability resulting in reduced volumes sold.
How did the company's profit margins change?
Despite the decline in revenue, AB Akola Group saw a rise in net profit by 27%, reflecting improved operational efficiencies and cost management.
What segments performed better despite revenue downturns?
The fertilizer trade, poultry business, and instant foods sectors increased their gross profits even as revenues declined.
What is the future outlook for AB Akola Group?
The company plans to expand its seed production capabilities with a new factory in Latvia, indicating a strategic focus on growth and market competitiveness.
Who can I contact for more information about AB Akola Group?
For inquiries, contact Mažvydas Šileika, CFO at AB Akola Group, via mobile at +370 619 19 403 or email at m.sileika@akolagroup.lt.
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