Ekosem-Agrar sees sales up in 2019

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EkoNiva products in Russia. Pic: Ekosem-Agrar

Ekosem-Agrar AG, the German holding company of Russian milk producer EkoNiva Group, has published its 2019 annual report.

The documents confirmed the preliminary group figures published in May, which showed an increase in total output, sales revenues and operating result in the fiscal year 2019.

Sales revenues climbed to €402.7m ($438.8m), up 64% on 2018.

As in previous years, revenues were primarily driven by raw milk production, which rose by 85% to €255m ($277.9m) and accounted for 63% of total revenues, up from 56% in 2018.

The company said progress was also achieved in milk processing, the youngest business area of the group, with revenues rising by approximately 39% to €38.3m ($41.7m). By converting and expanding its own processing capacity and investments in the EkoNiva umbrella brand, the group said it is pushing ahead with its strategic objective to expand its value chain in the milk production area and to become the leading vertically-integrated supplier of dairy products in Russia.

Earnings before interest, taxes, depreciation and amortization (EBITDA) improved by 44% to €167m ($182m). EBIT increased from €74.2m ($80.9m) to €92.5m ($100.8m). This is equivalent to an EBITDA margin of roughly 30% and an EBIT margin of 16%.

The group’s net income after taxes was €14.4m ($15.7m), compared to €18.7m ($20.4m) the previous year.

The group’s equity capital increased to €316.5m ($344.9m) in the fiscal year, up by almost 82% on the previous year. It said this is primarily attributable not only to the consolidated profit and currency effects, but also to the increase in revaluation and revenue reserves, resulting, among other things, from a complete revaluation of the group’s land and buildings, which is required under IFRS every three years. Consequently, the equity ratio climbed to 14.4% from 12.9%.

For the full year, the management board said it expects the dairy cow herd to grow to roughly 110,000 animals by the end of 2020. Raw milk output is expected to increase to approximately 1m tons in the fiscal year 2020.

Besides increasing its milk output, the group said its main strategic focus is further expansion of in-house milk processing and strengthening the EkoNiva brand.

The company said it projects revenues of between €525m ($572m) and €545m ($594m) and an EBITDA of between €180m ($196m) and €200m ($218m) for the 2020 fiscal year.