Q2 2027 Agrana Beteiligungs-Aktiengesellschaft Earnings Call
Speaker #1: 26, 27. You already got some insights, in our figures when we published an ATOC announcement regarding our full-year guidance revise on the 28th of September.
Speaker #1: Today we will provide you with more details also on the segment. As announced in our invitation, a presentation is available in reference to this call, and you can find this presentation as always in the IR section of our website.
Speaker #1: Our CEO, Stephan Buttner, and our CEO, Franz Ennser, will hold today's presentation. Which is divided into three parts. We will start with an introduction and will focus on the highlights of the first half.
Speaker #1: We will go on then with a segment overview, also referring, on the key financial KPIs, and finally we'll, we'll conclude with an outlook for the remaining financial year.
Speaker #1: The presentation will take about 20 to 25 minutes, and afterwards the lines will be opened to answer your questions. And now I may pass over to our CEO, who will start this presentation with slide number 4.
Speaker #2: Thank you, Hans. Good morning, ladies and gentlemen. welcome to our conference call for the first half, of the 26th, 27th business year. yeah, overall, performance in the in the in the second quarter and also in the first half of the business year accord according to our expectations.
Speaker #2: despite the fact that the market environment is still very challenging, so we see again an increase in energy prices, also raw materials prices, especially wheat and corn.
Speaker #2: But despite these very challenging environment, we were able to improve our operating performance just prior year, and we also consistently working on our strategic projects.
Speaker #2: When we look at the key figures our revenue, 1.7 billion in the first 6 months of the business year, operating profit amounted to 57.4 million.
Speaker #2: exceptional items, significantly decreased to 1.2 million euro. And the EBIT therefore 63.5 million versus 28 million in the previous year. Free cash flow, stable in the first half of the year, minus 9.2 million.
Speaker #2: This is a, yeah, significantly decreased versus prior year. So due to an increase, of working capital, on one hand, higher stock levels in sugar, and on the other hand, the out the cash out for the acquisition of the ember company.
Speaker #2: Net debt therefore, 464.1 million euro. versus 421 million euro in the previous year. Yearring for the 1.2% still in a in a in an exact range.
Speaker #2: And equity ratio, increased to 46.2%. Focus still, in the current business year is the integration of Austria Juice and Mercato Ember, the both the two acquisitions that we recently made.
Speaker #2: both companies are more or less developing according to plan. only issue that we are facing right now in the operative performance in Austria Juice is that we have the second year in a row a frost in, in Hungary.
Speaker #2: resulting in a, let's say, 90% loss of the apple harvest causing us, significant, yeah, utilization rate losses. and this is at the moment difficult to compensate.
Speaker #2: We also signed, the purchase agreement, of Etherum on the 9th of September 2026. The further step in our, portfolio strategy. we think that this is very important acquisition.
Speaker #2: yeah, Etherum is a, a well-established and company developing flavors, beverage compound spaces, powders, emulsions, functional blends, and stabilizers for the beverage industry. Yeah, with a very long history, very traditional company with a lot of expertise.
Speaker #2: and, and complementary, sales regions. more oriented in the eastern part of Europe. the company operates two production sites, one in Austria, with around 400 employees and the revenue that they generated in the in the previous year was 112 million euro.
Speaker #2: So now we are in the process, of, of the merger controls. So we are waiting for the enter trust approval. Yeah, we hope that this, will be finished, maybe in the in the in the first quarter of the next business year, so around March or April 2027.
Speaker #2: purchase price, so the evaluation of the company was 9 factor 9 EBITDA. this is the enterprise value, so this amounts to 150 million euro.
Speaker #2: Yeah, we already starting, of course, of course, let's say, in, in with, with, respecting the, the guardrails, concerning enter trust, with the with the preparation of the integration.
Speaker #2: of Etherum. we have a, a constant exchange, with the actual management there. And so we are here we are on making good progress as well.
Speaker #2: So let me please now hand over to Franz Ennser, and he will inform you about the raw material situation.
Speaker #3: Yeah, thank you very much. Good morning. Everyone. Yeah, basically, the framework conditions for, our industry in the food and agricultural sector, they are really highly volatile.
Speaker #3: I think everybody's well aware of the drought situation, especially in central, western, and eastern European areas. And this is affecting both availability, but also the price trends for the key raw material, meaning talking about wheat, talking about corn.
Speaker #3: also related to energy, energy markets, of course, quite strained now, which is the, the logic effect of the ongoing war situation, both in the Middle East area, but also in Ukraine and Russia.
Speaker #3: We have been able to perform in our binary biorefinery official stove, in the first half of the year, better than the year before. So we were able to process even higher volumes for the products of wheat, and of course, also wheat starch and also ethanol.
Speaker #3: we have started up our potato starch factory in lower Austria and Munich. by the end of August, our contracted volume, which was around 154,000 tons, will only lead to a crop of estimated 70 to 80,000 tons of starch potatoes.
Speaker #3: As a result of the drought weather conditional dry weather condition, especially during the summer months. yesterday evening, we have started up also the Austrian sugar factory in Tull.
Speaker #3: while the factories in the countries Slovakia, Czechia have already started up, as well as also Romania, and Hungary, will start most likely by the end of next week.
Speaker #3: In total, we have contracted, close to 60,000 hectares of sugar beets. Unfortunately, the yields this year will be significantly impacted, of course, also by the dry weather condition and lack of rainfall.
Speaker #3: So for Austria, our best guess is that the crop, will result in yields of 55 to 60 tons per hectare. Meaning that we will most likely finish our campaign in early January 2027.
Speaker #3: In our sugar segment, the total volume of processed sugar beet will be in the dimension of 3.2 to 3.3 million tons of sugar beet.
Speaker #3: As already mentioned by Stephan Buttner, we have an impact in terms of our, raw material availability, in the Austria Juice business area of, juice concentrate, especially in Hungary, but also partly in Poland.
Speaker #3: We had impacts also on selected soft fruits like raspberry, blackcurrants, and aronia berries, where we have seen, tremendous price increases versus the prior year.
Speaker #3: But basically, these, increasing costs could be. Forwarded to the customers. In terms of our energy cost, on page 13, I think this graph just illustrates that the levels which we had before the Ukrainian war started, in '21, '22, these levels we will most likely not be able to reach anymore.
Speaker #3: so we do expect, of course, also impacts, due to this increase of energy prices compared to the prior year. In terms of our investments, we have been investing close to, 45 million euros in the f 43 million euros compared to the 45 million euros, so pretty much in line with the previous year.
Speaker #3: The majority of our investments, has been done in the food and beverage illusion segment. So we basically focused, on some investments into the food service business, but also given the ri-rising demand, especially for protein-containing yogurts in the US, we have our increase we increased our capacity, in our, food preparation plant in the Lysander in the state of New York.
Speaker #3: in the starch and in the sugar, we have basically focused on, either capacity expansion, but also sustainability investments, including into, also here efficiency projects for improving our yields, and our, overall, let's say, production excellence activities.
Speaker #3: Our plan for the total year, '26, '27, amounts, around 110 to 130 million. The majority will be invested into the food and beverage illusion business, but this overall investment sum is slightly below our budgeted depreciation of around 117 million.
Speaker #3: So this is it in a nutshell about raw materials and investments.
Speaker #2: Yeah, thank you, Franz. So let's have, a look at the financials. already mentioned, group revenue 1.7 billion. Yeah, a slight increase of 0.5% versus prior year.
Speaker #2: Mainly, resulting out of the increase in, in revenue in our, food and beverage, solutions, segment. the increase is 4.3%. stable revenue in starch and the further decline in sugar mainly driven, by the lower sales prices in average.
Speaker #2: when we look at the development here of the quotations, world market sugar, prices, so we see and we think, yeah, that the bottom line, was reached, in the previous month.
Speaker #2: now we see we, we are there was start to see an increase in the quotations, as already mentioned, or Franz already mentioned also, across the whole Europe, we expect, a significantly, smaller crop, in sugar beets.
Speaker #2: Therefore, the overstocks, yeah, let's say, we will get rid of, of the of, of the overstocks, leading to a more balanced, market situation. in sugar, and, this will also lead, in the coming months to an increase in sugar prices.
Speaker #2: So when we look at the EBIT, development, by segment, we see a decrease of 11% in our food and beverage solutions segment. This is really driven by the crop failure in Hungary, in Austria Juice.
Speaker #2: This is a, fruit juice concentrate business, more commodity type of the business. We cannot compensate that. this, this costs us around 10 million euro.
Speaker #2: and, could only partly be, compensated by our recipes business, which, had a very solid, performance in the first half of the business year, and could also further improve the performance.
Speaker #2: Versus prior year. So here we are absolutely on the right track. and in starch, we also, see an improvement, versus prior year. mainly coming from the ethanol solid and good performance in the first half yeah.
Speaker #2: and when we look at our sugar business, here you can see, of course, on the EBIT level, a very significant improvement, but it's not only on EBIT because we also here had ex-extraordinary items out still of the closure of our two factories in Leopoldstove and Ružovani, which amounted to approximately 20 million euro.
Speaker #2: But when we deduct this so you can still see that our operative performance is significantly improving. Also, when we compare to our competitors, which see clearly shows, that, that we made our homework in the last three years.
Speaker #2: let's have a look at the outlook. so as we already, reported, we expect a very significant increase in EBIT and a also an increase, in revenue for '26, '27 versus prior year.
Speaker #2: we are also on track with our savings. Out of our horizon, program. outlook by segment, food and beverage solutions revenue moderate increase, EBIT moderate reduction due to, challenges in Austria Juice with the apple juice concentrate production.
Speaker #2: ACS starch, steady development, revenue, and a significant incre-increase, in the EBIT. And in sugar and moderate reduction, in revenue due to the decreasing price levels.
Speaker #2: especially in the first half of the business year. And a very significant improvement on EBIT level. Outlook for the third quarter, so last year we had an EBIT of 24 28.4 million euro for the actual third quarter in, in this business year.
Speaker #2: We expect it to be very significantly above this 20.4 million euro. Thank you very much for your attention. I'll hand back to Hannes Haider, who will inform you about the financial calendar.
Speaker #1: Thank you. before we go on with the Q&A session, I just wanted to point out that end of September, we published our financial calendar for the next financial year, '27, '28.
Speaker #1: And you can find all relevant, IR dates also on our website. We will now go on with the Q&A session.
Speaker #4: Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone.
Speaker #4: You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two.
Speaker #4: Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time.
Speaker #4: One moment for the first question, please. And the first question comes from Fatma Agnes Hamdani from Auto BHF. Please go ahead.
Speaker #5: Yes, hello. So, I have three questions on my side. So could you explain the main drivers of the working capital outflow? This is the first one.
Speaker #5: The second one, and you could you color mo could you give us more details on what you expect in terms of energy from the and provide an indication of the frame time required required to capture this, on your stretch EBIT increase, in Q2.
Speaker #5: So could you ethanol versus the underlying stretch, profit?
Speaker #2: So, sorry, we, we have a, a connection problem. We cannot understand you.
Speaker #4: Ms. Hamdani. Could you please repeat?
Speaker #5: Do you hear me well?
Speaker #2: Yes. Now we can hear you. Yeah.
Speaker #5: Okay. so the first one is, you explain what, are the main drivers of the working capital outflow. in Q2.
Speaker #2: Yeah.
Speaker #5: Okay. The second one is, on the synergy from, Isarom, acquisition. So could you provide an indication of the, time frame, required to capture this benefits?
Speaker #5: Okay. Then the third one is regarding the stretch EBIT increase in Q2 also. so could you, could you, explain how much of this improvement comes from ethanol, margin versus, underlying stretch, profitability?
Speaker #5: Do you yeah.
Speaker #2: Yes. We got you. Yeah. Very, very challenging questions. Thank you. okay. So let's start with your first questions, working capital. yeah, we had an increase, of, 29.8 million euro.
Speaker #2: and this is, of course, this is coming from, from, from the from the ACS business, mainly. So we had an increase in, in, in, in stocks here as well in our sugar, business.
Speaker #2: Yeah. And on the other hand, yeah, higher, receivables, and also, lower liabilities. So it's all about the 30 million, versus prior year. So it's not significant, I would say.
Speaker #2: Yeah. the major impact on the on the free cash flow is really coming by more than 50 million of the of the payouts for the acquisition of, of, of Ember and also we sold half of our factory AGFD in Romania.
Speaker #2: Two ingredient last year. And these both, issues, they amount to more than 50 million euro.
Speaker #5: Okay.
Speaker #2: second question, Isarom. Yeah. So it's very difficult, first of all, to say how long the merger control process will, will take. Yeah. So this can, can be five to six months, our, our biggest, concern actually is Russia.
Speaker #2: our lawyers told us that this can take also up to 10 or 11 months. So we will see. In the meantime, we, we are preparing everything once, the merger control process is cleared that we will be able to very quickly bring together the added value business of Austria-Juice with Isarom.
Speaker #2: the added value business of Austria-Juice amounts to approximately 50 to 60 million euro currently. Then this in total with, with, the Isarom business, will we will have a revenue of around 170 to 180 million.
Speaker #2: and, there we, yeah, we expect a, a constant, margin EBITDA between 15 and 20 percent, for the near future. And then, of course, we will work on the synergy effects, mainly our motion project where we are, looking for a replacement, of in, in the procurement side for natural flavors, which we will then make more in-house of, of course, also we can speed this up with the capacities and the knowledge, of Isarom.
Speaker #2: Yeah. And we will also further, try to, increase our, third-party flavor revenue. and therefore, yeah, we need to implement also the equipment, in the locations where we think that the markets are there.
Speaker #2: Our first, target market, is, Australia. So I cannot tell you right now how long this will take, but, we, we are already right now starting with planning the integration, bringing things together, and working on projects where we can get our synergies more quickly.
Speaker #2: When we talk about the in-house sourcing, especially of natural flavors, yeah, and then we make, we, we already working on the on the, site concept, yeah, what are we going to do with the sites in Austria from Austria-Juice and also from Isarom.
Speaker #2: That we have a, a very good network. So it's work in progress. yeah, we will see, of course, in the already in the next business year after the, the merger clearance, the results of Isarom.
Speaker #2: And then, yeah, we will constantly be working on, on market synergies, but also there are potentially some cost synergies.
Speaker #5: Okay.
Speaker #2: I hope this, this answers your question. I mean, this is a difficult question because I cannot really quantify when, what will happen in terms of synergies, yeah?
Speaker #2: But of course, this is a very a very strategic, acquisition, and it will bring us forward, quite quickly. with our plans of expansion, and growth in our food and beverage solutions segment.
Speaker #2: And yeah, of course, ethanol, is, is more or less, responsible. for the improvement of our results in starch. this is the main driver.
Speaker #5: Okay. Thank you.
Speaker #3: Then the next question. Then the next question comes from Baptiste de Louis de Ville from Kepler Chiffre. Please go ahead.
Speaker #4: Thank you for taking my, my questions. hello everyone. So yeah, my first question would be on, on, on sugar pricing. I, I think that's, on, on the new campaign, campaign I started.
Speaker #4: So I think it's time for negotiation. It's September, October, if I'm not wrong, with industrials but also and, and above all the, the big growers.
Speaker #4: So my question is, were you able to, to, to secure higher prices than, than last year? Or, or are you locked for, for, for this year on, on, on low prices?
Speaker #4: Which is quite important regarding the fact that, you're expecting very like, a huge drop on the on, on the yield. So so meaning that you will have a factory utilization, and higher, production cost, to, to, to handle this, th-this year.
Speaker #4: Thank you.
Speaker #2: Yeah. Yeah. So I would say it's mixed, yeah? On one hand, you know, we cannot, always decide when we lock in the contract with our customers.
Speaker #2: I mean, when they start a negotiations and they want to buy then, of course, we also have to make contracts with our key customers.
Speaker #2: this, this starts, usually around July-August and so on. So of course, this was a time when we were not able to assess whether this will be a bumper crop or like in the in the previous year, or a small crop or a normal crop.
Speaker #2: So, you know, you have to take the decision. So you have to take the train when it's coming. So of course, we also have contracts in place where we do not already see a significant increase in sales prices.
Speaker #2: But then, of course, things are developing and we also have already contracts in place with higher prices. Overall, I would say that it's more or less outweighs, the additional cost that we will see in, in, in this campaign, for the Excel business year.
Speaker #2: I mean, we have the underutilization you know, these are, the cost that we have to, to book already in the Excel business year. and we will be able to compensate for that.
Speaker #2: this amounts to approximately 10 million euro, to compensate for that by higher sales prices, yeah? So this is this is all I can say.
Speaker #2: Yeah, we see an increase in prices. Could, could can we fully leverage that? Not fully, but partly. But of course, we also have an issue on the capa-capacity side.
Speaker #2: But this is also limited because we already close two sites. So sugar, as you can see, is getting less and less a factor, especially when we see an increase in prices in the coming months.
Speaker #2: And, then what we think also, in, in the next business year, so I think, what I already said is that, that the, the toughest times are behind us, I would say.
Speaker #4: very clear. Thank you. And, and second question on, on FPS. so you you evaluate the impact of the, poor, juice, company I think in Hungary.
Speaker #4: You said 10 million. my question is more on the on the time length of this impact. will, will it wait on profitability for, for the rest of the fiscal year?
Speaker #4: Also maybe for 3/7/28? Can, can you can you tell me, please? Thank you.
Speaker #2: Yeah. So before performance in, in the juice business will you know, this is a campaign business in the fruit juice concentrate. It's, it's a li same cycle as in, in sugar.
Speaker #2: So we start harvesting and processing in, in September around. And then we have a marketing year. And this then the contracts last till the new harvest begins in September 20, 27.
Speaker #2: So we, we expect, of course, let's say, yeah, a not-so-good performance in the fruit juice concentrate business, for the next 10, 11 months, yeah?
Speaker #4: Thank you very much.
Speaker #3: Oh, there are no further questions by voice at this time, but some questions from Ms. Urbankova from Aster Group Ridge Just Buy. By written form.
Speaker #3: So the first question is, what are the major factors behind the recently raised full year 26, 27 EBIT guidance?
Speaker #2: Yeah. I can I answer right now?
Speaker #3: Yes, please go ahead.
Speaker #2: okay. Two more questions, please.
Speaker #3: Okay. Then the second question is, do you expect that segments AC ACS sugar will switch to black numbers in full year 26, 27? And the third question is, what was the major reason behind the significant improvement of the financial results in Q2 26, 27?
Speaker #2: Okay. Thank you. I, I'll try to answer now. So the first question is the, the main the major factors behind the recently raised, EBIT guidance.
Speaker #2: Yeah, this is, primarily driven by ACS. As we already mentioned, we see in sugar that our restructuring measures, yeah, let's, let's say, are translating in, in, in I would say lower production and also structural costs.
Speaker #2: starch, as we also mentioned already, is benefiting from, from the significantly improved, bioethanol margins. So and the combination of these two factors resulted in a in a much stronger result in the first half of the business year than we expected.
Speaker #2: And we, we, we think that we are able to carry this forward, and also see this, positive, impact for the full business year. do you expect the segment ACS sugar will switch to black numbers?
Speaker #2: look, we I already mentioned, so I think in the first half of the year we have approximately minus 3 million euro EBIT. we do not expect an operating performance in the second half of the business year, which shows a positive result.
Speaker #2: And this is logical. I mean, we have increased prices partly on the other hand, we are facing this approximately 10 million impact minus due to the underutilization of our plants, due to the very poor harvest.
Speaker #2: So and this is something that we have to book, fully in the actual business year. the revenues, they will spread over 12 months. starting from September with partly higher prices.
Speaker #2: So we cannot fully compensate that. So we will see on the operative level potentially an, an minus. I cannot exactly tell you the run rate, but it must be somehow I would say including including this, this impact of the un-underutilization maybe around 2, 2 million euro per month.
Speaker #2: So and, what we still have, what we still have in our hands is, is the sale, of the land, in, in Leopoldstorf where we closed the factory where we, of course, also expect, a significant, revenue stream.
Speaker #2: Also, with a positive impact on our EBIT. So therefore, I cannot tell you now it can be a in total, it can be a close race, yeah?
Speaker #2: Third question, significant improvement of the financial results. Yeah. this was, was driven by three main factors. So first of all, the net financial debt could be decreased as a result of our strong working capital performance.
Speaker #2: therefore, interest burn is reduced, also the interest rate hedging and improved, financing margins. Are a factor. so we have also a new ÖKB financing.
Speaker #2: And, this also supports the, the better results, but also most important, the foreign exchange result improved significantly due to our, I would say, currency exposure management and a reduction in negative carrier, carry on foreign currency swaps, yeah?
Speaker #2: So for sure the, the main factor is the, the foreign exchange results here.
Speaker #3: As a reminder, if you would like to ask a question, you may press star and one at this time. Oh, it looks there are no further questions at this time.
Speaker #3: So I would like to turn the conference back over to Hannes Haider for any closing remarks.
Speaker #2: So thank you, Esther. No further questions. thanks for your interest in AGRANA and your participation in the call. We wish you a nice remaining day and a successful day.
