Profits Soar for Continental Farmers as Ukraine planting gears up
Continental Farmers Group PLC (AIM: CFGP, ESM: CT3, "CFG" or "the Group"), the Ukrainian and Polish agricultural crop producer, announces its results for the six months ended 30 June 2012.
• Pre-tax profit for the six months of €3.5m +202%,
• EBITDA for the six months of €5.6m +104%.
• Equalised earnings per share of 2.1 cents +192%.
• 26,100 hectares under crop for 2012 harvest, up 42% on 2011 (excluding the 2,982 hectares harvested in the Mykolaiv Joint Venture with ED&F Man).
• Trial plantings in Mykolaiv Joint Venture have performed well to date.
• €8.1m capital expenditure invested in support of the expanded operations.
Post 30 June 2012 Update:
• Wheat and oil seed rape harvest successfully completed in Ukraine and Poland by 23 August 2012.
• Winter oil seed rape average net yield 3.2 tonnes per hectare in Ukraine and 3.9 tonnes in Poland.
• Winter wheat average net yield 6.2 tonnes per hectare in Ukraine and 8.1 tonnes in Poland.
• Spring wheat average net yield 4.6 tonnes per hectare in Ukraine and 7.6 tonnes in Poland.
• Strong market prices for cereals. Majority of Ukraine oil seed rape contracted at an average price of €445/ tonne.
• Autumn plantings of oil seed rape have been completed and winter wheat planting is underway.
• Land bank in place to enable planned growth in hectares under harvest for 2013.
Commenting on the interim results Nick Parker, CFG Chairman stated "While this is the report for the half year to 30 June 2012, it is also the first anniversary of the Group's listing and we can look back on 12 months which have seen the delivery of the 2011 results in line with market expectation and a significant growth in land harvested in line with our plans.
The increased tonnage in our cereal crops grown and harvested is a testament to the efforts made in planning, agronomy and execution, supported by substantial capital expenditure. These efforts have produced crops of high quality and good yields, which are further benefitting from firm market prices.
Our focus for 2012/13 will be to embed and benefit from the productivity improvements in agronomy and farming practices and the capacity increases provided by recent capital expenditure. Our JV with ED&F Man has started successfully. This model of partnership working is one which we will seek to extend.
Investment by the capital markets in agriculture has been growing worldwide and there is a continuing search by investors for opportunities to invest in primary agriculture. Increasingly, food security, coupled with land reform and land tenure rights, are being discussed at governmental and corporate levels. We keep close contacts with these developments in our markets and are well placed to participate in the future opportunities which they may offer. The cereal harvest has provided a good start to the year. Subject to no material adverse change, we expect to exceed management's targets for the year."
Commenting on the interim results Mark Laird, CEO stated, "CFG has reached another successful milestone in its journey to be one of the most efficient and profitable large scale food producers in Central Europe. The successful completion of the cereal harvest, delivering improved yields under exceptionally difficult climatic conditions, whilst significantly increasing our hectares under harvest underlines the Know How Do How capability that exists within the company. The business continues to hold a significant percentage of harvested cereals in store whilst the typical seasonal glut of crops finds its way on to the market.
The harvest of the root crops has got off to a good start and, given the adverse weather conditions in other parts of Europe, the markets for these crops look promising.
With the first phase of the autumn plantings completed in both Poland and Ukraine and the securing of the land required for further growth in 2013, the company is looking at how best to maximise earnings potential, given the strong commodity prices and the longer term prospects for the crops CFG typically grows. A percentage of the 2013 crop has been forward sold as would be typical in previous years.
The climatic challenges throughout Europe and indeed across the World demonstrate the importance of our choice of location and of our strategy of rotation and diversification. In a year of difficult growing conditions our farms are delivering strong yields across our range of crops. This success is vindication of our business model and provides us with further encouragement as we expand within our regions of operation. The Joint Venture Model already in place with ED & F Man is developing in a sustainable and controlled manner and it is likely that this strategy will be used with more potential partners in other sectors of CFG's business.
The focus of management remains on the development of precision farming and business expertise within the company and whilst at the same time drilling down on the daily detail of running a large farming operation. Working closely with the various local communities, within which the business operates remains core, and completely aligned, to the overall objective of growing the business for the longer term."
Basic earnings per share have been calculated on the profit or loss after taxation for the period and the weighted average number of ordinary shares. The historic equalised earnings per share was calculated on the profit and loss after taxation for the period and the number of shares in issue subsequent to the listing of the company on 28 June 2011. In the opinion of the Directors, these provide shareholders with more appropriate representation of the comparative underlying earnings derived from the Group’s businesses.
For further information: Continental Farmers Group Plc (http://www.continentalfarmersgroup.com/)
Source: newsroom - farmingnewsdaily.co.uk