Net profit grew by more than a third
The consolidated revenue for the half year period of the financial year 2024/2025 of AB Akola Group and its controlled companies (the Group) exceeded EUR 790 million and was 4% higher than in the corresponding period of the previous year.
The Group sold 1,634 thousand tons of various products, an increase of 11% compared to the same period last year.
Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the half year amounted to EUR 48 million, 14% higher than in the previous year. Net profit increased by 35% to EUR 23 million.
| 2023/2024 H1 |
2024/2025 H1 |
2024/2025 compared with 2023/2024, % |
|
|---|---|---|---|
| Total trading volume, tons | 1,467,849 | 1,634,446 | 11.3 |
| Revenue, thousand EUR | 759,122 | 790,452 | 4.1 |
| Gross profit, thousand EUR | 81,849 | 86,831 | 6.1 |
| EBITDA, thousand EUR | 42,169 | 48,209 | 14.3 |
| Operating profit, thousand EUR | 28,479 | 33,140 | 16.4 |
| Net profit, thousand EUR | 17,026 | 22,950 | 34.8 |
The consolidated revenue of Akola Group for the second quarter of FY 2024/2025 amounted to EUR 406 million, an increase of 20% compared to the previous year (EUR 338 million). Gross profit for the Q2 increased from EUR 30.7 million to EUR 42.4 million and operating profit from EUR 3.7 million to EUR 14.3 million. Net profit amounted to EUR 10.2 million, compared to EUR 0.5 million loss in the corresponding period of the previous year.
All operating segments showed revenue growth, with a slight decrease only in the small operating segment ‘Other Products and Services’. All four operating segments were profitable. The ‘Food Products’ segment showed the highest growth in operating profit, up 87%; the ‘Partners for Farmers’ Segment’s operating profit contracted by 25%; and the agricultural companies’ operating profit contracted the most, by 29%. Even in a still unfavorable environment for agriculture, the diversification of activities allowed the Group to increase its profits.
Mažvydas Šileika, Chief Financial Officer of Akola Group
The ‘Partners for Farmers’ segment generated more than EUR 585 million, accounting for 74% of the Group’s total revenue for the reporting period. The segment’s gross profit was EUR 42.3 million, and operating profit was EUR 12.4 million.
During the reporting period, we bought 1,279 thousand tons of grain and oilseeds, or 4% less than the previous year. Own grain elevators handled 6% less quantities than last year, as their turnover decreased due to slightly longer storage time in anticipation of more favorable market prices. In the second quarter of the financial year, it was decided not to expect a significant increase in cereal prices and to intensify sales. We sold 725 thousand tons of cereals and oilseeds, almost 11% more than at the same time last year, and revenue from these products grew by 3% to EUR 195 million, while gross profit for the year remained stable at EUR 4.6 million. The profit and loss account of SIA Elagro Trade, a Latvian company acquired in December, is not yet reflected in the half-year results.
M. Šileika
The production of compound feed and premixtures was 10% higher than last year. Sales of these products increased by almost 16% compared to the previous year. M. Šileika said sales were as high as the Group’s production capacity, but the average selling price was 10% lower than the previous year. Raw materials and feed additives traded quantities were 11% less, or 251 thousand tons, but at slightly higher prices. Total sales of compound feed, feed raw materials, and premixtures fell by 2% to EUR 200 million and gross profit by 8% to EUR 10 million.
The Group’s revenue from certified seeds, fertilizers, and plant protection products grew by 14% to EUR 139 million, while gross profit from these activities increased by 2.6% to EUR 14 million.
The trade of these products has been quite successful, but prices have remained relatively low. Fertilizer sales volume was up by almost 40%, with revenue up by almost 20% and gross profit up by only 1%, as sales prices were around 15% lower than last year. Plant protection products and micronutrient sales volume were up 180%, with a smaller increase of 12% in sales revenue but a contraction of 2.5% in gross profit. This product category is mostly affected by farmers’ still weak financial situation and intense competition in the market. Seeds were sold at the same level as at the same time last year, while sales revenue was broadly unchanged over the year, and gross profit rose by 8%.
M. Šileika
The agricultural machinery, equipment, and services market continued to shrink in all Baltic countries, driven by low farm-gate prices and increased borrowing costs. The Group’s revenue from sales, rentals, and various services of agricultural and farm machinery and equipment contracted by 11% to EUR 45 million, while gross profit from these activities fell by almost 22% to EUR 6.7 million.
The conditions were certainly unfavorable for the agricultural business, but we have something to be happy about: in a shrinking market environment, our market share of harvester sales grew in all Baltic countries, our market share of tractor sales grew in Lithuania, stayed the same in Latvia, and declined a little in Estonia. Overall, we have increased our market share, which is a good achievement.
M. Šileika
The ‘Food Production’ segment’s revenue, which accounted for 27% of the Group’s total revenue, was close to EUR 216 million. The gross profit of this business was EUR 39.8 million, and the operating profit was EUR 19.4 million.
The volume of poultry and poultry products sold grew by 10%, income from poultry business increased by 12% to EUR 155 million, and gross profit increased by 92% to EUR 30.4 million. The poultry business also delights with the improved efficiency of broiler farming.
M. Šileika
The production of flour and baking mixes remained almost at the same level, but consumption within the Group is increasing, with about 38% of the consumption used for higher value-added products and 13% less sold. Production of breadcrumbs grew by 11%, while sales volumes increased by 8%. This product group generated 16% lower revenue from transactions with external customers (EUR 11 million), but its gross profit grew by 4.5% to EUR 2.4 million.
The production of instant and ready-to-eat products fell by 4.5% but sales volume increased by 19.5%. Revenue from this activity grew by 8% to EUR 46 million, while gross profit decreased by 9% to EUR 6.9 million.
At the end of November, we officially launched our new instant noodles plant in Alytus, diverting some of our raw materials to it. However, testing of some production processes and equipment calibration is still ongoing. We do not expect to be fully operational until the financial year’s third or even fourth quarter. The construction of the breadcrumbs factory in Kėdainiai is progressing at full speed, and the production start-up should be on schedule.
M. Šileika
The ‘Farming’ segment’s revenue, representing 3% of the Group’s total revenue, was close to EUR 27 million. The gross profit from this activity was EUR 2.6 million, and the operating profit was EUR 1.1 million.
Our agricultural companies harvested over 132 thousand tons of crops in the reporting period, 3% more than last year. Wheat, malting barley, and sugar beet yields increased, winter rapeseed yields decreased slightly, and we lost some beans and peas harvest due to summer drought. Although we sold 11% more produce than at the same time last year, lower farm-gate prices led to a fall in crop production revenue of almost 3% to EUR 16.9 million and a small loss of EUR 25,000.
Milk production was over 19 thousand tons, the same as in the previous year, while sales increased by 22% to EUR 9.6 million against rising milk prices. Dairy farming generated a gross profit 141% higher than at the same time last year, or EUR 2.7 million.
M. Šileika
The ‘Other Products and Services’ segment accounted for 1% of the Group’s revenue and amounted to almost EUR 10 million. The gross profit from this activity was EUR 2.1 million, and the operating profit was EUR 0.25 million.
Revenue in this business segment declined by 2%, but gross profit grew by 3.8%. As a result of the switch to higher-quality pet food, we produced 33% less pet food than last year, sold 24% less, and generated 15% less sales revenue. Other activities in the segment grew: veterinary pharmaceuticals grew by 10%, and pest control and hygiene sales grew by as much as 42%. The latter was the most profitable activity in the segment in the reporting period. In December, we bought a small pest control company in Latvia, which should strengthen this business and our overall activity in Latvia.
M. Šileika
AB Akola Group owns the largest agricultural and food production group in the Baltics, employing over 5 thousand people. The group operates along the entire food production chain from field to fork, producing, preparing and marketing agricultural and food products, as well as providing goods and services to farmers. The Group’s financial year begins on 1 July.
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