AB Akola Group Financial Overview
For the financial year 2023/2024, the consolidated revenue of AB Akola Group and its subsidiaries reached over EUR 1,506 million. This marks a 25% decline compared to the previous year. The Group sold 3,025 thousand tons of various products, reflecting an 18% decrease from the same period last year.
Financial Performance Highlights
The consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year totaled EUR 75 million, which is an 11% increase from the previous year. Additionally, net profit climbed by 27% to EUR 26 million.
Fourth Quarter Insights
In the fourth quarter of the financial year, consolidated revenue fell from EUR 499 million to EUR 382 million. On a positive note, gross profit for this quarter rose from EUR 25 million to EUR 48 million. Operating profit also saw an increase, going from EUR 1 million to EUR 22 million, while net profit reached EUR 17 million, a significant turnaround from a net loss of EUR 4 million a year prior.
Challenges and Strategic Decisions
The revenue decline is mainly attributed to decreasing market prices, and the reduction in volumes is part of a strategic decision to focus on more profitable transactions. Despite the overall revenue drop, two key segments—Partners for Farmers and Food Production—managed to maintain comparable operating profits of EUR 21 million each. Although the largest segment, Partners for Farmers, faced the steepest revenue decline, all segments experienced reductions in revenues and profits. However, sectors such as fertilizer trade, poultry, milk production, and instant foods reported higher gross profits despite the overall revenue challenges.
Segment Performance Breakdown
The merger of the two business segments into Partners for Farmers generated EUR 1,137 million in revenue, which constitutes 75% of the Group's total revenue, alongside a gross profit of EUR 82.6 million.
Overall, the Group purchased 34% less grain but acquired 12% more rapeseed. The marketing of lower-quality grain has posed challenges, leading to a 30% drop in sales of cereals and oilseeds and a 48% decrease in revenue. Although sales of raw feed materials remained stable at 553 thousand tons, they faced lower pricing due to competition. In total, sales of feeds and raw materials saw a 20% reduction.
Future Prospects and Investments
Revenue from certified seeds, fertilizers, and plant protection products fell by 20% to EUR 246 million. Nevertheless, the seed supply segment shows promise, with the Dotnuva seed factory exceeding production expectations. Plans are in place for a second seed factory in Latvia, which is expected to commence operations in mid-2025, demonstrating a commitment to future growth.
While fertilizer sales volumes surpassed last year's figures, revenue declined due to lower market prices. However, gross profit improved significantly compared to the previous year. Despite facing competitive pressures and price reductions for plant protection products, there is an optimistic outlook for the upcoming financial periods, driven by systematic investments and strategic adjustments within the business.
Operational Overview
AB Akola Group stands as the largest agricultural and food production entity in the Baltics, employing 4,900 individuals and operating across the entire food production chain. With a financial year that begins on July 1, the Group is strategically positioned to adapt to 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.
