Research: Consumer
Agrana’s strong Q3, with its ability to push through cost increases, led to a good set of results for the first nine months of FY23 (9M23). Revenue was €2.743bn for 9M23, up 26% versus the prior year. Operating profit before exceptional items jumped to €121.6m, +77% versus a year ago. EBIT was €50.2m, down 33.9% vs 9M22, mostly due to an impairment charge in Q2. The outlook for 2022/23 is reaffirmed, with revenues expected to grow ‘significantly’ (ie 10–50%), group EBIT expected to grow ‘very significantly’ (ie over 50%) and operating profit before exceptional items and results of equity-accounted joint ventures expected to grow ‘significantly’.
Agrana |
Good nine-month performance
Consumer |
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13 January 2023 |
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Agrana’s strong Q3, with its ability to push through cost increases, led to a good set of results for the first nine months of FY23 (9M23). Revenue was €2.743bn for 9M23, up 26% versus the prior year. Operating profit before exceptional items jumped to €121.6m, +77% versus a year ago. EBIT was €50.2m, down 33.9% vs 9M22, mostly due to an impairment charge in Q2. The outlook for 2022/23 is reaffirmed, with revenues expected to grow ‘significantly’ (ie 10–50%), group EBIT expected to grow ‘very significantly’ (ie over 50%) and operating profit before exceptional items and results of equity-accounted joint ventures expected to grow ‘significantly’.
Strong revenue growth in all segments
In Fruit (+16.6% 9M23 revenue growth), price was the main growth driver in fruit preparations, while concentrates also benefited from an increase in volumes. Starch revenue was up 33.9%; demand was restrained but revenue growth was mainly driven by the large increase in ethanol prices, though the ethanol price was on a downward trend during Q3. Agrana was also able to pass on some of the significantly higher manufacturing costs in the Starch segment. Sugar revenues also grew 33.9%, driven by increased volumes and significantly higher prices.
EBIT performance mixed
The key driver of the earnings improvement was the turnaround in the Sugar segment, driven by a better sales price environment and tight cost management. Starch performed well thanks to a strong H1 for the high-margin ethanol business. The EBIT of the Fruit segment swung to a loss, driven in part by the €91.2m Q2 impairment charge, but also due to significantly weaker profitability in fruit preparations in Europe and Asia-Pacific. Performance in the concentrate business was strong. We note that Fruit EBIT would have been €39.6m, up 9.4%, excluding the impairment charge. Q3 at Agrana is dominated by agricultural campaigns, and the processing of raw materials has been very satisfactory so far, according to management. The capacity utilisation of the sugar factories is lower than in the prior year, partly due to drought causing lower beet volumes, while in the Fruit segment, the good volume of the 2022 apple campaign will lead to continued strong results in the concentrate business in the coming months, according to Agrana.
Valuation: Balanced business model
Agrana trades on 14.3x consensus FY24e earnings, which is at a premium to its sugar peer Südzucker, on 8.9x, and more in line with Ebro Foods, on 14.6x. This reflects Agrana’s balanced business model and strong market positions.
Consensus estimates
Source: Refinitiv, company data |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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