Six months of AB Akola Group

grain trade retreated, food production grew profitably - Seite 2

After the merger of the two business segments in the new segment ‘Partners for farmers’ in the financial year 2023/2024, the segment’s revenue went over EUR 574 million and accounted for 76% of the total income of the Group in H1. The segment's gross profit was EUR 47.8 million, and the operating profit was EUR 16.5 million.

"This year's cereal harvest is harder to market than usual. Although our own elevators were operating at maximum capacity and handled 16% more grain than in the previous year, the total volume of grain sourced and sold was lower due to a poorer harvest in Latvia, a saturated market, and our own tactical decisions. In the last months of the reporting period, the market declined. In addition to the weak overall demand on the world grain market, the war in Ukraine continued to weigh on the grain trade, both in terms of aggressive Russian grain exports and the restriction of crop exports from Ukraine by Poland. At the end of December, we had sold about half of the grain we had sourced, 655,000 tons, with almost 590,000 tons in stock. Raw materials and additives for feed were sold at almost 283 thousand tons or 23% more. We sold 14% less feed and premixtures than last year," said M. Šileika.

The Group's revenue from certified seeds, fertilizers, and plant care products fell by 24% to EUR 122 million. Revenue from agricultural machinery and equipment sales, rental, and services fell by 10% to EUR 50 million.

"The contraction in the supply of goods to farmers was significantly influenced by the reduction in winter crop acreage and weather conditions unfavorable for the use of products. Farmers who held back their sales due to low grain prices felt uncertain about the future and opted for minimalist agro-technological solutions in autumn. Increased competition also reduced the profitability of these activities. And although we expect a recovery in the spring, we cannot expect a reduction in competition," said M. Šileika.

The ‘Food Production’ segment's revenue, which accounts for 26% of the Group's total revenue, decreased to EUR 198 million. The gross profit of this activity was EUR 28.4 million.

"The poultry business recovers for the third consecutive quarter, with improvements in operational efficiency, product quality, and profitability. While poultry business revenue declined by 4%, gross profit grew by 41% to over EUR 15.8 million. Sales of flour, flour mixes, and breadcrumbs were 11% lower than the previous year, as more products were consumed internally to produce other products, which led to an 8% decrease in sales revenue to EUR 13 million. At the same time, gross profit from these activities was EUR 2.3 million. Sales of instant foods and ready-to-eat products fell by 29% to 120 million units due to high stocks in customers' warehouses, but sales revenue remained stable at over EUR 42 million, and gross profit increased by 90% to EUR 7.6 million. Grybai LT, a ready-to-eat plant acquired in July 2023, produced 3 million units of products in five months, 75% of which were exported. The operating profit for the whole food segment grew by 3% year-on-year to EUR 10.4 million, reflecting good prospects for this segment," said M. Šileika.