REG - Ros Agro PLC - 1st Half-year and 2nd Quarter Financial Results
07/08/2023 11:00
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RNS Number : 4854I Ros Agro PLC 07 August 2023
7 August 2023
ROS AGRO PLC financial results for 1H 2023 and 2Q 2023
7 August 2023 - Today ROS AGRO PLC (the "Company"), the holding company
of Rusagro Group (the "Rusagro"), a leading Russian diversified food producer
with vertically integrated operations, has announced the financial results for
the six months ended 30 June 2023.
1H 2023 HIGHLIGHTS
- Sales amounted to RUB 106,549 million (US$ 1,386 million(1)), a
decrease of RUB 20,681 million (-16%, US$ -282 million) compared to 1H 2022;
- Adjusted EBITDA(2) amounted to RUB 15,606 million (US$ 203 million),
a decrease of RUB 14,228 million (-48%, US$ -188 million) compared to 1H
2022;
- Adjusted EBITDA margin decreased to 15% in 1H 2023 from 23% in 1H
2022;
- Net profit for the period amounted to RUB 13,191 million (US$ 172
million), an increase of RUB 12,721 million (+2,706%, US$ +165 million);
- Net debt position(3) as of 30 June 2023 amounted to RUB 80,038
million (US$ 920 million);
- Net Debt/Adjusted EBITDA (LTM(4)) as of 30 June 2023 was 2.60x.
Commenting on the results, Timur Lipatov, CEO of Rusagro, said:
"In 2Q 2023 Rusagro sales increased in Agriculture and Meat segments.
Agriculture segment sales volume boosted as the result of realization of
agricultural products transferred from prior periods in anticipation of prices
and dollar exchange rate growth and due to late harvesting. Meat segment
continues to show rise in sales as the result of production volumes increase
both in Primorie after the launch of the pork production cluster, and due to
the efficiency increase in the Central region. Sales in Oil & Fat and
Sugar segments decreased following the drop in oil world prices, decrease of
sugar production volumes as the result of lower sugar content in sugar beet of
previous season, and the suspension of the Balakovo oil extraction plant for
modernization until September 2023.
Adjusted EBITDA declined across all segments except Agriculture reflecting the
pressure of lower selling prices, at the same time Rusagro showed a
significant increase in net income and a considerable decrease in net debt by
20%.
At the end of 2Q 2023 Rusagro acquired 50% shares and control over the NMZHK
oil and fats production group of companies. Following the acquisition, Rusagro
strengthened its market position and became №1 mayonnaises and mayonnaise
sauces manufacturer in Russia, and we expect to achieve significant synergies
starting from 3Q 2023."
Note: since some indicators and percentages in the press release were rounded
to the nearest whole number, the sum of the rounded values may not fully match
the totals.
Key consolidated financial performance indicators
in RUB million Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Sales 106,549 127,230 (20,681) (16) 59,154 65,724 (6,570) (10)
Gross profit (1) 20,948 32,584 (11,637) (36) 12,317 17,589 (5,272) (30)
Gross margin, % 20% 26% (6) pp 21% 27% (6) pp
Adjusted EBITDA (1) 15,606 29,833 (14,228) (48) 8,466 13,644 (5,178) (38)
Adjusted EBITDA margin, % 15% 23% (8) pp 14% 21% (7) pp
Net profit for the period (1,2) 13,191 470 12,721 2,706 7,774 (1,493) 9,268 -
Net profit margin % 12% 0% 12 pp 13% (2%) 15 pp
(1) Several adjustments were made to the published 1H and 2Q 2022 key
financial indicators:
• Gross profit for 1H 2022 was increased by RUB 706 million, Net
profit by RUB 565 million to reflect the distribution of depreciation expenses
between the quarters of 2022 in Oil and Fat segment, the same indicators for
2Q 2022 increased by RUB 352 million and RUB 282 million correspondingly;
• Gross profit for 1H 2022 was decreased by RUB 383 million, gross
profit for 2Q 2022 was decreased by RUB 191 million to reflect the
distribution of depreciation costs between lines of financial statements for
Meat segment;
• Gross profit and adjusted EBITDA for 1H 2022 were decreased by RUB
325 million, Net profit by RUB 261 million in order to reflect the
distribution of costs of Far East project in Meat segment, the same indicators
for 2Q 2022 has not changed.
(2) Net profit for the period is affected by non-cash income/(loss) on
revaluation of biological assets and agricultural produce. See details in
business sections below.
Key financial performance indicators by segments
in RUB million Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Sales, incl. 106,549 127,230 (20,681) (16) 59,154 65,724 (6,570) (10)
Sugar 23,974 27,102 (3,129) (12) 14,563 15,770 (1,207) (8)
Meat 22,649 20,624 2,024 10 11,923 11,366 557 5
Agriculture 11,559 11,105 454 4 5,663 2,919 2,744 94
Oil and Fat 51,399 72,012 (20,613) (29) 28,042 36,901 (8,859) (24)
Other 1,005 450 555 123 541 242 298 123
Eliminations (4,036) (4,063) 27 1 (1,578) (1,474) (105) (7)
Gross profit, incl. 20,948 32,584 (11,637) (36) 12,317 17,589 (5,272) (30)
Sugar 8,114 12,802 (4,688) (37) 5,298 7,250 (1,951) (27)
Meat 2,547 (386) 2,933 - 1,403 (1,537) 2,941 -
Agriculture 218 7,706 (7,488) (97) 992 5,970 (4,978) (83)
Oil and Fat 11,043 12,796 (1,754) (14) 5,402 6,010 (608) (10)
Other 435 49 386 786 269 98 171 175
Eliminations (1,409) (383) (1,026) (268) (1,047) (200) (846) (422)
Adjusted EBITDA, incl. 15,606 29,833 (14,228) (48) 8,466 13,644 (5,178) (38)
Sugar 6,714 11,328 (4,613) (41) 4,704 6,649 (1,945) (29)
Meat 734 1,037 (303) (29) 287 448 (161) (36)
Agriculture 1,116 5,319 (4,203) (79) 1,233 1,145 87 8
Oil and Fat 6,192 9,473 (3,282) (35) 2,030 4,171 (2,140) (51)
Other (655) (387) (267) (69) (358) (383) 25 7
Eliminations 1,504 3,064 (1,560) (51) 570 1,614 (1,044) (65)
Adjusted EBITDA margin, % 15% 23% (8) pp 14% 21% (7) pp
Sugar 28% 42% (14) pp 32% 42% (10) pp
Meat 3% 5% (2) pp 2% 4% (2) pp
Agriculture 10% 48% (38) pp 22% 39% (17) pp
Oil and Fat 12% 13% (1) pp 7% 11% (4) pp
SUGAR SEGMENT
In 1H 2023 Sugar segment earned RUB 6,714 million of adjusted EBITDA (-41%
y-o-y) with 28% margin (-14 pp y-o-y). The financial results of the Sugar
Segment of 1H 2023 compared to 1H 2022 are presented in the table below:
Sugar segment 1H and 2Q 2023 Financial Results
in RUB million Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Sales 23,974 27,102 (3,129) (12) 14,563 15,770 (1,207) (8)
Cost of sales (15,860) (14,301) (1,559) (11) (9,265) (8,520) (745) (9)
Gross profit/ (loss) 8,114 12,802 (4,688) (37) 5,298 7,250 (1,951) (27)
Gross profit margin 34% 47% (13) pp 36% 46% (10) pp
Distribution and selling expenses (1,876) (1,976) 100 5 (931) (896) (36) (4)
General and administrative expenses (768) (802) 34 4 (373) (394) 20 5
Other operating income/ (expenses), net 221 (314) 535 - 224 (108) 332 -
incl.Reimbursement of operating costs 88 138 (50) (36) 88 138 (50) (36)
(government grants)
incl. other adjustments to EBITDA 62 (410) 473 - 41 (195) 235 -
(non-recurring items)
Operating profit 5,691 9,710 (4,019) (41) 4,218 5,853 (1,635) (28)
Adjusted EBITDA 6,714 11,328 (4,613) (41) 4,704 6,649 (1,945) (29)
Adjusted EBITDA margin 28% 42% (14) pp 32% 42% (10) pp
In 2Q 2023 compared to 2Q 2022 Sales of Sugar segment decreased by 8% mainly
due to the decrease in sugar sales volume by 11% down to 233 thousand tons.
The reduction in sales volumes is caused by the decrease in production volumes
in season 2022/2023 compared to season 2021/2022 due to lower sugar content in
sugar beet attributable to bad weather conditions that affected the quality of
sugar beet.
In 6M 2023 compared to the same period last year Sales of Sugar segment
decreased by 12% mainly due to the decrease in sugar sales volume by 13%.
Revenue from sale of beet pulp in 6M 2023 decreased by RUB 247 million,
revenue from sales of buckwheat and molasses also decreased by RUB 312
million.
Production and sales volume of sugar in 1H and 2Q 2023
Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Sugar production volume, 104 104 (0) (0) 35 49 (13) (28)
thousand tonnes
Sales volume, 381 437 (57) (13) 233 260 (27) (11)
thousand tonnes
Cost of sales in 2Q and 6M 2023 increased y-o-y because of the increase in
sugar beet and its processing costs per unit of sugar as the result of
decrease in sugar beet quality and sugar content.
Other operating income/ (expenses), net in 2Q and 6 M 2023 increased mainly
due to the positive dynamics of operating forex differences.
MEAT SEGMENT
In 1H 2023 Meat segment earned RUB 734 million of adjusted EBITDA (-29% y-o-y)
with 3% margin (-2 pp y-o-y). The financial results of the Meat Segment of 1H
2023 and 2Q 2023 compared to 1H 2022 and 2Q 2022 respectively are presented in
the table below.
Meat segment 1H and 2Q 2023 Financial Results
in RUB million Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Sales 22,649 20,624 2,024 10 11,923 11,366 557 5
Net gain/ (loss) on revaluation of biological assets and agricultural produce 2,272 (700) 2,972 - 945 (1,667) 2,612 -
Cost of sales (22,374) (20,312) (2,063) (10) (11,465) (11,237) (228) (2)
Gross profit/ (loss) 2,547 (386) 2,932 - 1,403 (1,537) 2,939 -
Gross profit margin 11% (2%) 13 pp 12% (14%) 26 pp
Gross profit excl. effect of biological assets revaluation 274 313 (38) (12) 458 129 329 255
Adjusted gross profit margin 1% 2% (1) pp 4% 1% 3 pp
Distribution and selling expenses (766) (889) 123 14 (451) (459) 8 2
General and administrative expenses (1,217) (1,029) (188) (18) (616) (582) (34) (6)
Other operating income/ (expenses), net 182 618 (436) (71) (133) 471 (603) -
incl. reimbursement of operating costs (government grants) 23 14 9 64 4 9 (5) (54)
incl. other adjustments to EBITDA (non-recurring items) 215 496 (281) (57) 117 407 (291) (71)
Operating profit 745 (1,686) 2,431 - 204 (2,106) 2,311 -
Adjusted EBITDA 734 1,037 (303) (29) 287 448 (161) (36)
Adjusted EBITDA margin 3% 5% (2) pp 2% 4% (2) pp
Sales of the Meat segment increased by 5% in 2Q 2023 compared to the
respective period of 2022 and by 10% in 1H 2023 compared to the respective
period of 2022 mainly due to sales volume increase which was caused by the
production outputs growth. Positive dynamics was achieved by gradual increase
in production capacities to the planned level in the Far East and by growth in
production efficiency in the Central Federal District, including the expansion
of deboning capacity.
Production and sales volume of pork products in 1H and 2Q 2023
Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Pigs production, 175 160 15 9 86 83 4 4
thousand tonnes in live weight
Sales volume, 146 133 13 10 74 73 1 2
thousand tonnes
Cost of sales increased by 2% in 2Q 2023 compared to the respective period of
2022, and by 10% in 1H 2023 compared to the 1H 2022. is mainly because of
higher sales volumes.
Net gain on revaluation of biological assets and agricultural produce in 2Q
2023 and in 1H 2023 resulted from an increase in fair value for consumable
livestock pigs and decrease in costs during the reporting period compared to
the respective figures at the beginning of respective periods.
Other operating expenses in 2Q 2023 showed negative dynamics mainly due to
additional costs caused by the outbreak of African swine fever and one-off
gain for the reversal of provision for legal claims in 2022.
AGRICULTURAL SEGMENT
As at 30 June 2023 Rusagro's area of controlled land stands at 674 thousand
hectares
(31 December 2022: 660 thousand hectares). In 1H 2023 Agriculture segment
earned RUB 1,116 million of adjusted EBITDA (-79% y-o-y) with 10% margin
(-38 pp y-o-y). The financial results of the Agricultural Segment of 1H 2023
and 2Q 2023 compared to 1H 2022 and 2Q 2022 respectively are presented below.
Agriculture segment 1H and 2Q 2023 Financial Results
in RR million Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Sales 11,559 11,105 454 4 5,663 2,919 2,744 94
Net gain/ (loss) on revaluation of biological assets and agricultural produce (2,092) 1,651 (3,743) - (677) 4,496 (5,173) -
Cost of sales (9,249) (5,049) (4,200) (83) (3,994) (1,445) (2,549) (176)
Gross profit/ (loss) 218 7,706 (7,488) (97) 992 5,970 (4,978) (83)
Gross profit margin 2% 69% (67) pp 18% 204% (186) pp
Gross profit excl. effect of biological assets and agricultural produce 2,310 6,056 (3,745) (62) 1,669 1,474 195 13
revaluation
Adjusted gross profit margin 20% 55% (35) pp 29% 50% (21) pp
Distribution and selling expenses (2,068) (1,013) (1,055) (104) (1,019) (353) (667) (189)
General and administrative expenses (780) (766) (14) (2) (428) (430) 1 0
Other operating income/ (expenses), net 457 597 (141) (24) 361 164 197 120
incl. reimbursement of operating costs (government grants) 457 42 414 975 425 41 384 929
incl. other adjustments to EBITDA (non-recurring items) (125) 325 (451) - (145) (54) (91) (169)
Operating profit (2,174) 6,525 (8,699) - (95) 5,352 (5,447) -
Adjusted EBITDA 1,116 5,319 (4,203) (79) 1,233 1,145 87 8
Adjusted EBITDA margin 10% 48% (38) pp 22% 39% (17) pp
In 2Q 2023 in comparison to 2Q 2022 Sales of the Agriculture segment increased
by 94% to RUB 5,663 million due to higher sales volume of all crops.
1H 2023 in comparison to 1H 2022 Sales of the Agriculture segment increased by
4% to RUB 11,559 million mainly because of higher sales volume of sugar beet,
soybean and sunflower and higher corn sales price, partially compensated by
lower sales prices of soybean, wheat and sunflower.
Increase in oil crops sales volume in 1H 2023 and 2Q 2023 as well as increase
in sugar beet sales volume in 1H 2023 was caused by sales volume transfer to
1H 2023 due to adverse climate conditions, leading to prolongation of
harvesting period to 2023.
Increase in sales of corn in 2Q 2023 in comparison with the same period of
prior year is caused by the conclusion of contract in 1Q 2023, with the
condition of delivery until the end of August. In 2022, the main sales took
place during 1Q.
Sales prices for wheat decreased due to the fall in global wheat prices
because of high grain stocks. Prices decrease for oil crops (sunflower and
soybean) as well as sugar beet is attributed to the quality of harvest
following adverse weather conditions during the prolonged harvest gathering
period.
Sales volume of crops in 1H and 2Q 2023
Thousand tonnes Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
sugar beet 494 59 435 741 - - - -
wheat 194 194 (1) (0) 135 115 20 17
soybean 180 116 64 55 94 15 80 549
corn 92 111 (19) (17) 63 10 53 526
sunflower seeds 56 21 35 170 16 5 10 202
The main reason for the increase in Cost of sales is the growth of quantity of
goods sold.
The increase in Distribution and selling expenses for 1H 2023 and 2Q 2023 in
comparison with the same periods of the previous year is caused by additional
storage and processing costs due to the adverse weather conditions and
prolonged harvest period.
Net gain/(loss) on revaluation of biological assets and agricultural produce
depends on revaluation amounts in opening and closing inventory balances. As
agricultural produce matures and at the point of harvest, a gain on
revaluation of agricultural produce to fair value less costs to sell is
recognized. During subsequent sale, a loss from the revaluation of
agricultural products sold in the reporting period is recognized in the amount
of the previously recognized gain. Loss in the 1H and 2Q 2023 is associated
with the sale of the previous year's harvest. Gain in 1H and 2Q 2022 was
caused by the revaluation of growing crops of the new harvest considering
higher sales prices anticipated in 2022.
Net gain/(loss) on revaluation of crops and its subsequent realisation do not
affect the Adjusted EBITDA figure.
Reimbursement of operating costs (government grants) was received in higher
amount in 1H and 2Q 2023 as the company received subsidies for grain crops
sales, support of elite seed, ameliorants usage.
Change in Other operating income except government grants in 1H and 2Q 2023 in
comparison with the same periods of 2022 is connected mainly due to the
differences relating to one-off gain from the sale of fixed assets and
inventories as well as changes in foreign exchange gains/(losses) amount.
OIL AND FAT SEGMENT
In 1H 2023 Oil and Fat segment earned RUB 6,192 million of adjusted EBITDA
(-35 %
y-o-y) with 12% margin (-1 pp y-o-y). The financial results of the Oil and Fat
Segment for 1H 2023 and 2Q 2023 compared to 1H 2022 and 2Q 2022 respectively
are presented below.
Oil and Fat segment 1H and 2Q 2023 Financial Results
in RUBl million Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Sales 51,399 72,012 (20,613) (29) 28,042 36,901 (8,859) (24)
Cost of sales (40,356) (59,216) 18,859 32 (22,640) (30,891) 8,251 27
Gross profit/ (loss) 11,043 12,796 (1,754) (14) 5,402 6,010 (608) (10)
Gross profit margin 21% 18% 3 pp 19% 16% 3 pp
Distribution and selling expenses (4,078) (3,970) (109) (3) (2,172) (2.166) (6) (0)
General and administrative expenses (1,917) (1,369) (548) (40) (1,096) (686) (410) (60)
Other operating income/ (expenses), net (1,950) (4,125) 2,175 53 (1,372) (3,139) 1,767 56
incl. reimbursement of operating costs (government grants) 126 216 (90) (41) 125 210 (85) (41)
incl. Other adjustments to EBITDA (non-recurring items) (805) (3,988) 3,183 80 (103) (3,090) 2,987 97
Operating profit/ (loss) 3,098 3,333 (235) (7) 762 18 744 4,025
Adjusted EBITDA 6,192 9,473 (3,282) (35) 2,030 4,171 (2,140) (51)
Adjusted EBITDA margin 12% 13% (1) pp 7% 11% (4) pp
In 2Q 2023 in comparison to 2Q 2022 Sales of the Oil and fat segment
decreased by 24% to RUB 28,042 million due to the decrease in prices on the
world market and in sales volume of meal, crude oil, margarine and dry mixes,
which was partially compensated by the increase in sales volumes of industrial
fats, bottled oil and mayonnaise.
In 1H 2023 in comparison to 1H 2022 Sales of the Oil and fat segment decreased
by 29% to RUB 51,399 million due to lower global prices and overall sales
volumes decrease. Lower sales volumes of crude oil and meal due to
difficulties with the vessels shipment caused by ice situation in Astrakhan in
January and February 2023 and the suspension of Balakovo oil extraction plant
for modernization starting from May 2023.
Sales volumes of oil and fat and dairy products in 1H and 2Q 2023
Thousand tonnes Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
meal 257 299 (42) (14) 124 149 (25) (17)
crude oil 156 200 (43) (22) 102 108 (5) (5)
industrial fats 152 141 11 7 76 62 14 22
dry whey mixes 6 8 (2) (29) 3 4 (1) (28)
consumer oil&fat products 136 136 (0) (0) 72 64 8 12
consumer dairy products 8 7 0 6 4 4 1 13
Cost of sales in 1H 2023 in comparison to 1H 2022 decreased due to the decline
in sales volumes of products. Cost of sales decreased more than Sales mainly
due to reduction of world prices for raw materials.
The growth of General and administrative expenses in 1H 2023 compared to 1H
2022 is mainly attributable to higher costs of information and consulting
services.
The decrease in Other operating expenses is due to lower charity expenses
and foreign exchange differences in 1H 2023 compared to the same period in
2022, which was partially compensated by accrual of provision for bad debts.
KEY CONSOLIDATED CASH FLOW INDICATORS (NOT IFRS PRESENTATION*)
The key consolidated cash flow indicators presented according to management
accounts methodology
in RUB million Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Net cash from operating activities, incl. 32,576 (706) 33,283 - 16,572 4,424 12,148 275
Operating cash flow before working capital changes 15,047 28,447 (13,401) (47) 8,055 11,302 (3,247) (29)
Working capital changes 18,140 (27,928) 46,069 - 8,837 (5,982) 14,818 -
Net cash from investing activities, incl. (11,974) (3,962) (8,011) (202) (9,684) (1,696) (7,989) (471)
Purchases of property plant and equipment and inventories intended for (11,818) (4,627) (7,191) (155) (9,729) (1,538) (8,190) (532)
construction
Net cash from financing activities 5,341 39,140 (33,799) (86) 12,070 30,214 (18,145) (60)
Net effect of exchange rate changes on cash and cash equivalents 4,228 (18,995) 23,223 - 2,295 (11,035) 13,330 -
Net increase / (decrease) in cash and cash equivalents 30,172 15,476 14,696 95 21,253 21,908 (655) (3)
(*) See Appendix 4
Debt position and liquidity management
in RUB million 30 June 2023 31 December 2022 Variance
Units %
Gross debt 232,517 233,390 (873) (0)
Short-term borrowings 172,001 172,352 (351) (0)
Long-term borrowings 60,516 61,038 (522) (1)
Cash and cash equivalents, bank deposits and bonds (152,479) (133,668) (18,811) (14)
Short-term cash, deposits and bonds (118,507) (99,697) (18,810) (19)
Long-term cash, deposits and bonds (33,971) (33,971) (0) (0)
Net debt 80,038 99,723 (19,685) (20)
Short-term borrowings, net 53,494 72,655 (19,161) (26)
Long-term borrowings, net 26,545 27,067 (522) (2)
Adjusted EBITDA (LTM(4)) 30,788 45,015 (14,227) (32)
Net debt/ Adjusted EBITDA (LTM) 2.60 2.22 0.4 pp
Net finance income/ (expense)
in RUB million Six months ended Variance Three months ended Variance
30 June 2023 30 June 2022 Units % 30 June 2023 30 June 2022 Units %
Net interest expense (3,693) (3,317) (376) (11) (1,768) (1,803) 35 2
Gross interest expense (9,264) (8,428) (835) (10) (4,620) (3,873) (747) (19)
Reimbursement of interest expense 5,570 5,111 459 9 2,852 2,070 782 38
Interest income 4,954 4,348 606 14 2,512 2,040 473 23
Other financial income, net 6,179 (19,682) 25,861 - 3,197 (11,797) 14,994 -
Net foreign exchange gain/ (loss) 6,484 (19,551) 26,035 - 3,385 (11,723) 15,108 -
Other financial income / (expenses), net (305) (131) (174) (133) (188) (74) (114) (153)
Total net finance income/ (expenses) 7,439 (18,652) 26,091 - 3,941 (11,560) 15,501 -
Net debt decreased at 30 June 2023 compared at 31 December 2022 as a result of
an increase in bank balances and bank deposits.
In 1H 2023 Rusagro continued to enjoy benefits from the state agriculture
subsidies programme. Rusagro continued to receive bank loans with decreased
preferential interest rates under the programme of government support. Under
this programme, the government provides subsidies to the banks to compensate
the loss of income on borrowings with decreased interest rates, given by the
banks to agricultural producers. In 1H 2023 IFRS accounts these borrowings are
accounted according to its face value with no adjustments to prevailing market
rates. The differences between nominal and market interest rate is recognized
as either government grants in a statement of financial position for
borrowings received with the purpose to finance investment projects or
interest expenses in a statement of comprehensive income for general purpose
borrowings.
Net finance expense of 1H 2022 in the sum of RUB 18,652 million changed to net
finance income in the amount of RUB 7,439 million as the result of positive
dynamics in forex differences.
________________________________
(1) The exchange rates used for translation of RUB amounts into USD represent
average Central Bank official exchange rate for the respective reporting
period for income, expenses and profits and the Central Bank official exchange
rate as at the reporting date for balance figures.
(2) Adjusted EBITDA is defined as operating profit before taking into account
(i) depreciation included in operating profit, (ii) net gain/ (loss) on
revaluation of biological assets and agricultural produce, (iii) non-recurring
components of other operating income/ (expenses), net, (iv) share-based
remuneration, (v) provision for impairment of loans issued (see Appendix 2 for
the detailed calculation of Adjusted EBITDA). Adjusted EBITDA is not a measure
of financial performance under IFRS. It should not be considered as an
alternative to profit for the period as a measure of operating performance or
to cash flows from operating activities as a measure of liquidity. Our
calculation of Adjusted EBITDA may be different from the calculation used by
other companies and therefore comparability may be limited. We believe that
Adjusted EBITDA provides useful information to investors because it is an
indicator of the strength and performance of our ongoing business operations,
including our ability to fund discretionary spending such as capital
expenditures, acquisitions of subsidiaries and other investments and our
ability to incur and service debt.
(3) Rusagro determines the net debt as short-term borrowings and long-term
borrowings less cash and cash equivalents, bank deposits, bank promissory
notes and bonds held for trading.
(4) LTM - The abbreviation for the "Last twelve months".
NOTE
ROS AGRO PLC (LSE, MOEX: AGRO) - a holding company of Rusagro Group, a leading
Russian diversified food producer with vertically integrated operations in the
following branches:
Agricultural:
Rusagro currently controls one of the largest land banks among Russian
agriculture producers, with 674 thousand hectares of land under control
located in the highly fertile Black Earth region of Russia (in the Belgorod,
Tambov, Voronezh, Kursk, Orel regions), and in the Far East Primorye Region.
Land and production sites are strategically located within
the same regions to optimize efficiency and minimize logistical costs. Rusagro
is one
of the major sugar beet producers in Russia, but it also produces wheat and
corn, sunflower seeds and soybeans. These products are partially consumed by
the Meat and Oil and Fat segments, supporting a synergistic effect and
lowering price change risk.
Oil and Fat:
Rusagro is the leading crude sunflower oil and consumer margarine producer,
second largest industrial fats and mayonnaise producer in Russia with products
sold under eleven key brands, such as EZhK, Schedroye Leto, Mechta Khozyaiki,
umbrella brand Ya Lublu Gotovit (includes Moskovskiy Provansal, Novosibirskiy
Provansal and Saratovskiy Provansal), Rossiyanka and Saratovskiy Slivochniy,
Benefitto, Maslava and Leto Krasno (红色夏日), which is sold on the
Chinese market. Rusagro also produces dry industrial mixes, cheeses, butter
and cream sold under three brands: Milie, Syrnaya Kultura and Ya Lublu
Gotovit. Rusagro owns four crushing and two oil & fats plants and leases
two milk processing plants. Owning its sunflower and soy oil production allows
Rusagro to control the source of the sunflower and soybean oil required to
produce oil and fats products.
Sugar:
Rusagro is one of the leading Russian sugar producers (№3 in Russia and №1
on cube white sugar market), producing sugar from sugar beet at nine
production sites in four regions. Group produces white and brown sugar sold
under the brands Russkii Sakhar, Chaikofsky, Mon Café and Brauni. The Sugar
segment is vertically integrated and sugar beets are supplied by Rusagro's
Agriculture segment, which ensures a consistent supply. The sugar segment also
operates a cereal plant and sells buckwheat and rice under the brand Tyoplye
Traditsii.
Meat:
Rusagro is №3 largest pork producer in Russia. It operates large commercial
pig breeding complexes adhering to best practices regarding biosecurity
standards, nucleus farms, compound feed plants, slaughterhouses and meat
processing plants in Tambov and Belgorod Regions and in the Russian Far East.
Since 2016, Rusagro sells retail products under its own brand Slovo Myasnika
(Butcher's word).
CONFERENCE CALL
Rusagro management is organizing a conference call on Company's 1H and 2Q 2023
financial results for investors and analysts.
Details of the call:
Date: 7 August 2023
Time: 4:00 PM (Moscow) / 2:00 PM (London)
Subject: ROS AGRO PLC 1H and 2Q 2023 Financial results
Registration: available up to 3:00 PM Moscow time / 1:00 PM London time on 7 August
https://us06web.zoom.us/webinar/register/WN_nQXkjv0QSNSvWy42GOjg7w#/registration
(https://us06web.zoom.us/webinar/register/WN_nQXkjv0QSNSvWy42GOjg7w)
(https://ib-translations.zoom.us/j/88086186455?pwd=YUtyTlcxREtoSitwSWpCK2ZSWDlVUT09)
FORWARD-LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed to be,
forward-looking statements. These forward-looking statements do not relate to
historical or current events,
or to any future financial or operational activity of the Group.
By their nature, forward-looking statements involve risk and uncertainty
because they relate
to future events and circumstances, a number of which are beyond the Rusagro
Group's control. As a result, actual future results may differ materially from
the plans and expectations set out
in these forward-looking statements.
The Group undertakes no obligation to release the results of any revisions to
any forward-looking statements that may occur due to any change in its
expectations or to reflect events
or circumstances after the date of this document.
CONTACTS
Alexey Kulchitskiy
Director M&A, IR, ESG
Phone: +7 495 363 1661,
E-mail: ir@rusagrogroup.ru
Appendix 1. Consolidated statement of comprehensive income for the Six and
Three months ended 30 June 2023 (in RUB thousand)
Six months ended Three months ended
30 June 30 June
2023 2022 2023 2022
Sales 106,549,362 127,230,280 59,153,906 65,724,120
Net gain/(loss) on revaluation of biological assets and agricultural produce (965,675) (1,848,173) (419,128) 1,249,037
Cost of sales (84,635,964) (92,797,796) (46,417,377) (49,383,727)
Gross profit 20,947,723 32,584,311 12,317,401 17,589,430
Distribution and selling expenses (7,354,540) (7,360,741) (3,774,048) (3,731,561)
General and administrative expenses (4,862,514) (3,888,980) (2,682,800) (2,326,856)
Other operating income/(expenses), net 278,489 (3,503,330) (512,774) (2,886,036)
Operating profit / (loss) 9,009,158 17,831,260 5,347,779 8,644,977
Interest expense (3,693,364) (3,317,386) (1,768,118) (1,802,674)
Interest income 4,953,569 4,348,186 2,512,334 2,039,794
Net gain/(loss) from bonds held for trading - 42 - -
Other financial income/ (expenses), net 6,178,811 (19,682,492) 3,196,917 (11,797,046)
Profit before income tax 16,448,174 (820,390) 9,288,912 (2,914,949)
Income tax expense (3,256,871) 1,290,456 (1,514,557) 1,421,574
Profit for the period 13,191,303 470,066 7,774,355 (1,493,375)
Other comprehensive income - - - -
Total comprehensive income for the period 13,191,303 470,066 7,774,355 (1,493,375)
Profit is attributable to:
Owners of ROS AGRO PLC 13,194,402 419,901 7,770,662 (1,544,258)
Non-controlling interest (3,099) 50,165 3,693 50,883
Profit for the period 13,191,303 470,066 7,774,355 (1,493,375)
Total comprehensive income is attributable to:
Owners of ROS AGRO PLC 13,194,402 419,901 7,770,662 (1,544,258)
Non-controlling interest (3,099) 50,165 3,693 50,883
Total comprehensive income for the period 13,191,303 470,066 7,774,355 (1,493,375)
Earnings per ordinary share for profit attributable to the owners of ROS AGRO 490.38 15.61 288.80 (57.39)
PLC, basic and diluted
(in RR per share)
Appendix 2. Segment information for the Six months ended 30 June 2023 (in RUB
thousand)
6M 2023 Sugar Meat Agriculture Oil and Fat Other Eliminations Total
Sales 23,973,640 22,648,603 11,559,185 51,399,022 1,004,700 (4,035,788) 106,549,362
Net gain/ (loss) on revaluation of biological assets and agricultural produce - 2,272,491 (2,092,419) - - (1,145,747) (965,675)
Cost of sales (15,860,003) (22,374,393) (9,248,747) (40,356,197) (569,399) 3,772,775 (84,635,964)
incl. Depreciation (1,052,138) (2,413,367) (959,561) (1,851,417) (8,811) (19,051) (6,304,345)
Gross profit 8,113,637 2,546,701 218,019 11,042,825 435,301 (1,408,760) 20,947,723
Distribution and Selling, General and administrative expenses (2,643,930) (1,982,738) (2,848,308) (5,995,076) (1,050,411) 2,303,409 (12,217,054)
incl. Depreciation (33,778) (62,539) (112,643) (437,660) (71,488) 19,051 (699,057)
Other operating income/(expenses), net 221,266 181,526 456,647 (1,950,089) 1,841,712 (472,573) 278,489
incl. Reimbursement of operating costs (government grants) 87,768 23,413 456,578 126,345 - - 694,104
incl. Other adjustments to EBITDA (non-recurring items) 62,433 214,983 (125,301) (804,995) 1,961,579 63,723 1,372,422
Operating profit / (loss) 5,690,973 745,489 (2,173,642) 3,097,660 1,226,602 422,076 9,009,158
Adjustments:
Depreciation included in Operating Profit 1,085,916 2,475,906 1,072,204 2,289,077 80,299 - 7,003,402
Other adjustments to EBITDA (non-recurring items) (62,433) (214,983) 125,301 804,995 (1,961,579) (63,723) (1,372,422)
Net gain/ (loss) on revaluation of biological assets and agricultural produce - (2,272,491) 2,092,419 - - 1,145,747 965,675
Adjusted EBITDA* 6,714,456 733,921 1,116,282 6,191,732 (654,678) 1,504,100 15,605,813
* Non-IFRS measure
Appendix 2 (continued). Segment information for the Three months ended 30 June
2022 (in RUB thousand)
6M 2022 Sugar Meat Agriculture Oil and Fat Other Eliminations Total
Sales 27,102,430 20,624,192 11,104,731 72,011,911 450,110 (4,063,094) 127,230,280
Net gain/ (loss) on revaluation of biological assets and agricultural produce - (699,569) 1,650,641 - - (2,799,245) (1,848,173)
Cost of sales (14,300,846) (20,310,679) (5,049,076) (59,215,582) (400,989) 6,479,376 (92,797,796)
incl. Depreciation (1,181,997) (2,455,940) (640,730) (1,867,096) (5,008) (2,294) (6,153,065)
Gross profit 12,801,584 (386,056) 7,706,296 12,796,329 49,121 (382,963) 32,584,311
Distribution and Selling, General and administrative expenses (2,778,005) (1,918,243) (1,778,577) (5,338,741) (564,112) 1,127,957 (11,249,721)
incl. Depreciation (25,488) (64,349) (129,044) (285,588) (57,924) 2,294 (560,099)
Other operating income/(expenses), net (313,811) 617,567 597,377 (4,124,909) (473,926) 194,372 (3,503,330)
incl. Reimbursement of operating costs (government grants) 137,891 14,309 42,463 215,964 - - 410,627
incl. Other adjustments to EBITDA (non-recurring items) (410,433) 496,143 325,440 (3,988,030) (538,999) 675,011 (3,440,868)
Operating profit / (loss) 9,709,768 (1,686,732) 6,525,096 3,332,679 (988,917) 939,366 17,831,260
Adjustments:
Depreciation included in Operating Profit 1,207,485 2,520,289 769,774 2,152,684 62,932 - 6,713,164
Other adjustments to EBITDA (non-recurring items) 410,433 (496,143) (325,440) 3,988,030 538,999 (675,011) 3,440,868
Net gain/ (loss) on revaluation of biological assets and agricultural produce - 699,569 (1,650,641) - - 2,799,245 1,848,173
Adjusted EBITDA* 11,327,686 1,036,983 5,318,789 9,473,393 (386,986) 3,063,600 29,833,465
* Non-IFRS measure
Appendix 3. Consolidated statement of financial position as at 30 June 2023
(in RUB thousand)
30 June 2023 31 December 2022
ASSETS
Current assets
Cash and cash equivalents 51,644,566 21,473,030
Short-term investments 81,868,828 91,382,536
Trade and other receivables 17,713,189 24,176,680
Prepayments 4,317,825 13,435,149
Current income tax receivable 168,658 832,423
Other taxes receivable 8,349,532 8,360,935
Inventories and short-term biological assets 90,591,115 78,580,317
Other current assets 5,111,396 4,126,715
Total current assets 259,765,109 242,367,785
Non-current assets
Property, plant and equipment 136,391,641 121,165,803
Inventories intended for construction 434,082 864,550
Right-of-use assets 7,247,347 6,916,539
Goodwill 2,364,942 2,364,942
Advances paid for non-current assets 4,299,038 5,482,770
Long-term biological assets 2,737,556 3,240,959
Long-term investments and receivables 42,526,511 42,527,657
Investments in associates 488,916 455,916
Deferred income tax assets 4,942,113 5,964,527
Other intangible assets 1,930,510 1,284,263
Other non-current assets 91,350 190,978
Total non-current assets 203,454,006 190,458,904
Total assets 463,219,115 432,826,689
LIABILITIES and EQUITY
Current liabilities
Short-term borrowings 172,000,955 172,351,514
Lease liabilities 875,658 863,452
Trade and other payables 18,956,944 17,024,472
Provisions 197,092 137,542
Current income tax payable 509,572 76,061
Other taxes payable 7,004,815 8,149,780
Total current liabilities 199,545,036 198,602,821
Non-current liabilities
Long-term borrowings 60,515,802 61,038,393
Government grants 11,528,551 11,153,211
Lease liabilities 5,637,017 5,086,897
Deferred income tax liability 3,218,929 2,283,752
Total non-current liabilities 80,900,299 79,562,253
Total liabilities 280,445,335 278,165,074
Equity
Share capital 12,269 12,269
Treasury shares (490,607) (490,607)
Additional paid-in capital 26,964,479 26,964,479
Other reserves 1,363,177 1,363,177
Retained earnings 140,037,927 126,843,525
Equity attributable to owners of ROS AGRO PLC 167,887,245 154,692,843
Non-controlling interest 14,886,535 (31,228)
Total equity 182,773,780 154,661,615
Total liabilities and equity 463,219,115 432,826,689
Appendix 4. Consolidated statement of cash flows for the Six months ended 30
June 2023 (in RUB thousand) - NOT IFRS PRESENTATION (*)
Six months ended
30 June 2023 30 June 2022
Cash flows from operating activities
Profit before income tax 15,817,190 (820,390)
Adjustments for:
Depreciation and amortization 7,003,401 6,713,162
Interest expense 9,335,817 8,427,977
Government grants (6,536,472) (5,863,671)
Interest income (4,953,000) (4,348,185)
Loss/ (gain) on disposal of property, plant and equipment (116,880) (473,166)
Net (gain) / loss on revaluation of biological assets and agricultural produce 965,675 1,848,173
Change in provision for impairment of loans issued (123) 3,028
Interest expense on leases 133,630 122,595
Change in provision for net realisable value of inventory 591,994 508,561
Change in provision for impairment of receivables and prepayments 1,605,292 35,050
Foreign exchange (gain) / loss, net (8,171,930) 22,932,796
Lost / (reversal of) harvest write-off - 5,945
Net (gain) / loss from bonds held for trading - (42)
Settlement of loans and accounts receivable previously written-off (31,379) -
Change in provision for impairment of advances paid for property, plant and 29,613 (31,224)
equipment
Change in other provisions 59,549 (149,060)
Dividend income (345,499) -
(Gain)/loss on disposal of other assets 456 5,162
Gain on SolPro loans redemption (260,587) (400,307)
Other non-cash and non-operating expenses, net (80,095) (69,178)
Operating cash flow before working capital changes 15,046,652 28,447,226
Change in trade and other receivables and prepayments 3,358,544 (12,932,703)
Change in other taxes receivable 739,260 1,475,217
Change in inventories and biological assets (364,691) (11,191,254)
Change in trade and other payables 15,358,946 (2,991,723)
Change in other taxes payable (951,606) (2,287,788)
Cash generated from operations 33,187,105 518,975
Income tax paid (610,788) (1,225,243)
Net cash from operating activities 32,576,317 (706,268)
Appendix 4 (continued). Consolidated statement of cash flows the Six months
ended 30 June 2023 (in RUB thousand) - NOT IFRS PRESENTATION (*)
Six months ended
30 June 2023 30 June 2022
Cash flows from investing activities
Purchases of property, plant and equipment (11,683,992) (4,445,855)
Purchases of other intangible assets (451,098) (523,970)
Purchases of land lease rights (15,486) (16,906)
Proceeds from sales of property, plant and equipment 12,165 451,961
Purchases of inventories intended for construction (134,198) (180,927)
Purchases of associates (33,000) (71,000)
Dividends received 345,499 377,269
Proceeds from sales of other investments 13,205 -
Other investing activities (26,672) 447,203
Net cash from investing activities (11,973,577) (3,962,225)
Cash flows from financing activities
Proceeds from borrowings 79,094,106 43,447,215
Repayment of borrowings (111,419,218) (20,618,379)
Interest paid (3,238,680) (3,011,301)
Change in cash on bank deposits 33,286,758 16,108,072
Proceeds from sales of bonds with maturity over three months* - 140,783
Loans given* (3,500) (1,250,617)
Loans repaid* 527,164 (431,958)
Interest received* 6,454,099 4,686,213
Proceeds from government grants 690,780 581,096
Purchases of non-controlling interest - (518)
Dividends paid to owners Ros Agro PLC - (120)
Repayment of lease liabilities - principal (50,492) (511,339)
Other financial activities - 711
Net cash from financing activities 5,341,017 39,139,858
Net effect of exchange rate changes on cash and cash equivalents 4,227,780 (18,995,338)
Net increase/ (decrease) in cash and cash equivalents 30,171,537 15,476,027
Cash and cash equivalents at the beginning of the period 21,473,029 46,462,179
Cash and cash equivalents at the end of the period 51,644,566 61,938,206
(*) For the purpose of conformity with the methodology of the Group's net debt
calculation investments in financial assets related to financial activities
are presented in Cash flows from financing activities in the Group's
management accounts.
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