12 Oct 2017 --- Sugar, starch and fruit manufacturer Agrana, has delivered compelling results for the first half of the 2017/18 financial year. The company has reported that operating profit (EBIT) grew to €130.6 million (US$154.9 million), a substantial improvement of 44.5 percent from one year earlier.
The group's revenue rose slightly, by 3.2 percent to €1,362.1 million (US$1616.1 million) (H1 prior year: €1,320.3 million (US$1566.5 million)). Agrana Chief Executive Officer Johann Marihart says: “Agrana had a very satisfactory first half of 2017/18 in all three business segments. We are especially pleased with the significant profit growth in the Starch segment, where productivity gains and higher ethanol quotations enabled EBIT to surpass the already very good year-earlier result. While in the Sugar segment our earnings were improved by a year-on-year increase in sugar sales prices, EBIT in the Fruit segment was pushed up by higher sales volumes both in the fruit preparations and fruit juice concentrate businesses.”
Sugar segment revenue in the first half of 2017/18 grew by 7.0 percent year-on-year to €376.7 million (US$446.9 million). While sugar sales volumes were constant, higher sales prices relative to one year earlier were responsible for this positive change. The doubling of EBIT to €36.6 million (US$43.4 million) was driven by an improvement in the market environment from one year earlier.
Revenue in the Starch segment for the first half of 2017/18 was €385.5 million (US$457.2 million), representing growth of 6.2 percent from one year earlier. The revenue growth resulted primarily from higher sales volumes of starches and higher bioethanol prices than in the year-ago period. EBIT, at €50.5 million (US$59.8 million), was 57.8 percent stronger than the already good year-earlier result. Besides the higher bioethanol quotations, other drivers of the earnings growth were productivity gains, stable raw material prices and lower energy prices.
Revenue in the Fruit segment in the first half of 2017/18, at €599.9 million (US$711.5 million), was in line with the same period one year earlier. In the fruit preparations business, a slight increase in sales volumes, higher selling prices, and positive foreign currency effects (notably in Eastern Europe, the USA, Brazil and South Korea) added up to revenue growth.
In the fruit juice concentrate operations, revenue decreased as a result of lower raw material prices and the associated reduction in concentrate prices for the product from the 2016 crop compared to 2015. EBIT of the Fruit segment overall, at €43.5 million (US$51.5 million), grew by 8.5 percent from the prior year's comparative figure.
Outlook For the full 2017/18 financial year, Agrana expects group revenue to rise moderately and continues to predict a significant increase in operating profit (EBIT). Total investment across the three business segments in the financial year, at approximately €140 million (US$166 million), will exceed the budgeted depreciation of about €93 million (US$110 million).
Agrana opens additional facility at the corn starch mill in Austria Elsewhere in the business, Agrana has opened a new facility at its corn starch mill in Aschach an der Donau in Upper Austria. Following the investment of around €80 million (US$94.8 million), Agrana has increased its processing capacity at the plant by a third to 540,000 tons of corn per year. The additional capacity has also created 25 new jobs in the region.
The Aschach site processes corn to make high-quality products for downstream processing industries. Corn starch is used, on the one hand, mainly in technical applications (such as in the paper, cosmetic and construction industries) and, on the other, in the food industry, e.g. in the production of noodles and bakery products. As a whole, Agrana processes the commodities corn, potatoes and wheat to make starches at five production sites in Europe and sells 2.5 million tons of starch-based products to 2,000 customers worldwide operating in over 20 different sectors.
Specialties strategy Agrana relies on a specialty-based strategy in the starch market. “Although our starch mills are smaller than those of US competitors, this makes it easier to flexibly manufacture specialty products. We exploit our expertise to focus on specialty starches, e.g. for clean label starches which have not been chemically modified and therefore have invested in boosting capacity and value-adding technologies here in Aschach. We are also increasingly processing special corn varieties here, such as waxy corn, and play a leading role in terms of organic and GMO-free starches for the food industry,” notes Agrana CEO Johann Marihart.
Development of Aschach site This facility opened in 1936 as a potato starch mill. In 1958, the site was converted into a corn starch mill with a milling capacity of 60 tons of corn per day. The plant has been repeatedly expanded since 1984, particularly since Austria joined the EU. The preceding development phase took place in 2006/2007 and focused mainly on the modernization of infrastructure and more effective environmental protection. Production takes place year-round and mainly involves operating in four shifts. 280 personnel at the Aschach site ensure that the various processes are performed efficiently.
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