Ekosem-Agrar takes advantage of good environment in Russia to further boost its growth
EkoNiva Group at Agritechnica 2017 in Hanover:Ekosem-Agrar takes advantage of good environment in Russia to further boost its growth
Walldorf, 14 November 2017 - The year 2017 saw Ekosem-Agrar GmbH, the German holding company of Russian milk producer Ekoniva Group, continue its growth amidst a very good environment, especially for milk production.
In the course of 2017, the dairy cow herd increased to roughly 39,400 animals (+44%) with a daily milk output of over 900 tons (+50 %). The milk price recovered notably and currently stands at approx. EUR 0.44, i.e. a good 25% above the previous year's average price. The Russian government's subsidies and Russian banks' increased interest in the domestic agricultural sector also make for a good investment and financing environment. Moreover, the general economic and political situation in Russia is showing a very positive trend.
The political focus primarily rests on the subsidization of investments in dairy cow facilities. Thanks to the very good support in the form of low-interest loans and non-repayable investment grants in combination with the positive market situation in the dairy sector, new operations are able to generate positive cash flow after a short time. Ekosem-Agrar therefore decided to take advantage of the favorable conditions and to make further investments in the construction of dairy cow facilities. For the full year, Ekosem-Agrar plans to complete three dairy cow facilities for a total of approx. 8,800 dairy cows with a daily milk output of 240 tons in the Kaluga, Voronezh and Novosibirsk regions. Another four plants with a total capacity of approx. 14,400 dairy cows (approx. 400 tons of milk per day) are already under construction in these regions and will be completed in 2018. The company's dairy cow herd is expected to grow to roughly 60,000 animals by the end of 2018.
The expansion is supported by a very strong team, which has grown by 22% to roughly 5,000 employees since the beginning of the year. The in-house training program launched four years ago helps leverage the huge potential of young and motivated staff. Together with many experienced skilled workers, this puts Ekosem-Agrar in an excellent position, also in manpower terms, to push ahead with the company's growth.
Russia continues to be characterized by a strong structural change where very large agricultural enterprises buy many small and medium-sized businesses. However, the good economic conditions for large agricultural enterprises have also led to strongly increased land prices. To keep up with this trend, Ekosem-Agrar has already taken over some existing farms this year and is in talks about further takeovers. Against the background of the good financing opportunities, the Group has been able to increase its agricultural land by a total of 48,000 hectares to approx. 248,000 hectares (+24%) this year. Further takeovers are currently under discussion.
Following some initial successes in milk processing and marketing, the management has decided to expand these activities as well and seized opportunities to invest in two existing processing companies located close to the Ekosem-Agrar locations. In October, the Group acquired a dairy including some 12,000 hectares of agricultural land and a dairy cow facility with roughly 3,000 cows in the Kaluga region. The takeover of another dairy in the Voronezh region is underway. Having its own milk processing resources for butter, milk powder and long-life milk allows Ekosem-Agrar to respond flexibly to fluctuations in the raw milk market and to play an even more active role to strengthen its position in negotiations with food retailers. The takeovers will increase the company's proceeding capacity from 40 tons to 390 tons per day.
Stefan Dürr, main shareholder and Managing Director of Ekosem-Agrar GmbH: "We are very satisfied with the way our company has evolved. We are taking advantage of the good conditions for strategic investments with sound judgment to continue our growth and expand our market leadership. In spite of our many plans and projects, we never lose sight of the repayment of our two bonds in 2021 and 2022. We are convinced that the additional cash flows generated as a result of the investments will make it easier for us to repay the bonds."
Ekosem-Agrar GmbH Walldorf, Germany is the German holding company in the Ekoniva Group, one of the largest Russian agricultural companies. With over 89,620 head of cattle (thereof approx. 39,400 dairy cows) and an average milk production of more than 900 tonnes per day, the company is the largest milk producer in the country. The group has approx. 248,000 hectares of farmland and is also one of the leading seed producers in Russia. Stefan Duerr, founder and Managing Director of the company, has been active in Russian agriculture since the 80s and has played a decisive role in its modernisation over the past two decades. In 2009, he was awarded the German Federal Cross of Merit for his contribution within the German-Russian Agricultural and Political Dialogue Project. The corporate group has about 5,000 employees at seven locations in six regions in Russia and achieved a total output of EUR 149.2 million and an EBIT of EUR 31.9 million in fiscal year 2016. For further information visit: http://www.ekosem-agrar.de/en
Adrian Schairer // Ekosem-Agrar GmbH // T: +7 920 449 17 12 // E: firstname.lastname@example.org
Irina Makey // Ekosem-Agrar GmbH // Johann-Jakob-Astor-Str. 49 // 69190 Walldorf // T: +49 (0) 6227 3585 919 // E: email@example.com // www.ekosem-agrar.de
Media / Investor Relations
Fabian Kirchmann // IR.on AG // T: +49 (0) 221 9140 970 // E: firstname.lastname@example.org
14.11.2017 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.deLanguage: English Company: Ekosem-Agrar GmbH Johann-Jakob-Astor-Str. 49 69190 Walldorf
Germany Phone: +49 (0)6227 358 59 33 Fax: +49 (0)6227 358 59 18 E-mail: email@example.com Internet: www.ekosem-agrar.de ISIN: DE000A1MLSJ1, DE000A1R0RZ5 WKN: A1MLSJ, A1R0RZ Listed: Regulated Unofficial Market in Berlin, Dusseldorf, Frankfurt, Hamburg, Hanover, Stuttgart (bondm) End of News DGAP News Service