AB LINAS AGRO GROUP- VERTICALLY INTEGRATED AGRICULTURAL AND FOOD INDUSTRY GROUP Tomas Tumėnas, Finance Director.

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Presentation transcript:

AB LINAS AGRO GROUP- VERTICALLY INTEGRATED AGRICULTURAL AND FOOD INDUSTRY GROUP Tomas Tumėnas, Finance Director

1 International vertically integrated agribusiness Group. Runs business in Lithuania, Latvia, Estonia and Denmark. Produce and trade agricultural commodities and food products, feedstuff and provide products for farming. THE PLACE IN FOOD CHAIN

2 COMPANIES 3 dormant companies not included 39 companies 39 companies 2,334employees2,334employees

3 VISION

4 Consolidated revenue was EUR 574 million. Sales volume in tons – 2 millions. Gross profit was more than EUR 41 million. EBITDA – EUR 22 million. FINANCIAL HIGHLIGHTS IN FY 2014/15 Fiscal year of the company starts July 1st Fiscal year of the company starts July 1st

5 SALES VOLUME IN TONS, MILLION MT 2010– – – – –2012

6 OPERATING AND NET PROFIT, MILLION EUR

7 BUSINESS SEGMENTS

8 INCOME & OPERATING PROFIT STRUCTURE INCOME STRUCTUREOPERATING PROFIT STRUCTURE FY 2014/15 Grain and feedstuff handling and merchandising Products and services for farming Agricultural production Food products

9 Grain Oilseed Feedstuff Grain storage and preparation Logistic services GRAIN AND FEEDSTUFF HANDLING AND MERCHANDISING 65%

10 GROUP IS EXPORT ORIENTED The Group remained one of the biggest grain exporters in the Baltic states. Exported its production to more than 28 countries around the world. 1.8 million tons of cargo departed from the Baltic seaports. 75%Revenue received from exports 75%Revenue 1.3 million tons of cargo sent from Lithuanian ports

11 OWN GRAIN STORAGE FACILITIES Total storage capacity 254 thousand mt

12 During the FY 2014/15, Group-owned grain storages took in 479 thousand tons of grain-16% more than a year before. 1.6 million tons of grain and feedstuff sold in total (the same as previous year). Two grain elevators built in Lithuania and Latvia in GRAIN, FERTILIZERS AND FEEDSTUFF ARE STORED IN GRAIN ELEVATORS

13 PRODUCTS AND SERVICES FOR FARMING Certified seed Fertilizers Plant protection products Agricultural and forestry machinery Grain storage facilities Spare parts 21%

14 Big challenges: absence of funding from the EU structural funds for purchase of agricultural machinery in all three Baltic countries, low grain prices and a strong decrease in milk purchase price. 914 units of new and used agricultural machinery and equipment sold in the Baltic States - almost the same as in previous year (920 units). Operating profit shrunk by 46%. PRODUCTS AND SERVICES FOR FARMING The worsened situation of the farmers negatively affected the Group's operating results The worsened situation of the farmers negatively affected the Group's operating results

15 Trade in fertilizers grew from EUR 51.8 million to EUR 52 million. Trade in plant protection products went up from EUR 11.8 million to EUR 14.9 million. Although the demand for seeds was lower in spring, seeds sales remained almost unchanged - EUR 14.4 million (EUR 14.6 million in FY 2013/14). PRODUCTS AND SERVICES FOR FARMING

16 Cereals growing Rapeseed growing Sugar beet growing Dairy production Meat production AGRICULTURAL PRODUCTION 4 %

17 AGRICULTURAL PRODUCTION 7 farming companies 7 farming companies

18 AGRICULTURAL PRODUCTION The area of arable land is >16,900 ha, ~6,744 ha own. Agricultural production ~80,000 tons: wheat – 43 thousand mt, malting barley – 18 thousand mt, sugar beet 13 thousand mt, rapeseed – 10 thousand mt.

19 EFFECTIVITY OF CROP PRODUCTION GroupAverage for Lithuania Wheat Rapeseed Malting barley 4.3 t/ha 2.3 t/ha 3.8 t/ha 7 t/ha 3.3 t/ha 6.4 t/ha

20 EFFECTIVITY OF MILK PRODUCTION 3,209 dairy cows (9% increase); Total 31 thousand tons of milk per year (17% more than previous year); The average milk yield per cow 8.62 t/y or 27% more than the average in Lithuania. Farming company Šakiai district Lukšių ŽŪB was announced the most efficient Lithuanian milk producer in 2014 and the most advanced livestock farm in Lithuania in Thepurchase price of raw milk fell by 21%Thepurchase price of raw milk fell by 21%

21 AS Putnu Fabrika Kekava“ - Latvian poultry producer No 1. SIA Lielzeltini - Latvian poultry producer No 2. SIA Broileks grow and sell live chicken. SIA Cerova incubate eggs and sell day- old chicks. FOOD PRODUCTS 10%

22 Pork and beef production was not profitable in Lithuania. Edible oil production margin was fluctuating. Poultry consumption tends to grow. The company was partly familiar with poultry business from previous egg production business evaluation. Since 1991 Linas Agro has been trading feedstuffs : synergy was expected. The opportunity to sell a broad range of products and get better margins was attractive. WHY POULTRY ??

23 AS Putnu Fabrika Kekava (PFK) was carrying restructuring process. SIA Lielzeltini was profitable, PFK was making loss. The companies were competing and had different owners. None of the companies had full production cycle. BEFORE THAT...

24 Full poultry manufacturing cycle: from egg incubation to production of fresh poultry and processed products. The brand "Kekava" took the 3rd place among food products for the third year in a row in Latvia. 25 retail shops. Sold 18,890 tons of poultry meat - a little bit more than a year before (18,755 tons). AS PUTNU FABRIKA KEKAVA

25 SIA Lielzeltini has an incomplete production cycle consisting of broiler breeding, production of fresh poultry and processed products sold under the brand name “Bauska”, as well as production of compound feed. Sold 12,308 tons of poultry meat or 14% more than during the corresponding period of previous year (10,760 tons). SIA Broileks produced over 1,336 tons of live weight of broilers over the respective period. SIA Cerova produced almost 6.5 million day-old chicks or 2.5 % more than previous year (6.3 million). LIELZELTINI BROILEKS CEROVA

26 ADVANTAGES FOR POULTRY COMPANIES Since former competitors have de facto become one producer, the poultry companies use advantage from mutual cooperation and also integration within the Group. Acting together they become a more competitive and sizeable poultry industry player in the Baltic market. PFK+Lielzeltini EBITDA : 2012 – EUR 2 million 2014 – EUR 8 million

27 Upgrading production lines to produce more and a wider variety of poultry products. Merging the sales and accounting departments, laboratories and slaughterhouses to avoid the duplication of functions and make product cost lower. IMPROVING THE COMPETITIVENESS OF POULTRY

28 The main objective is sustainable growth. To strengthen position in the Baltic and Scandinavian markets. To expand operations in Central European countries. STRATEGIC OBJECTIVES OF THE COMPANY

29 Expansion of grain trade in the Baltics, by opening new grain elevators and strengthening warehousing positions in the ports. Expansion of fertilizer trade business in Lithuania, Latvia, Poland and other CE countries. Implementation of investment program in poultry companies, going from mio 62 Eur to mio 90 Eur sales within 3 years period. Increasing productivity of agricultural companies. LONG-TERM OBJECTIVES OF THE COMPANY

30 and the last, but not the least

Build the largest and best serving network of agricultural machinery services in the Baltics.