In 2023, KSG Agro agricultural holding reduced its net loss by 30.9% to $1.16 million, while revenue increased by 13.8% to $18.79 million.
This data is presented in the company’s annual report on the Warsaw Stock Exchange.
“The increase in revenues in 2023 is largely due to the resumption of grain exports, which were limited in 2022 due to the beginning of Russia’s invasion of Ukraine. In addition, in 2022, the Group used more of its own grain for feed production rather than purchasing it, seeking to reduce dependence on external suppliers of feed ingredients due to wartime logistical reasons,” the document says.
It is specified that the total revenue from crop production last year amounted to $12.6 million compared to $4.5 million in 2022, but the net change in the fair value of crops was less than a year earlier – $1.6 million versus $4.6 million.
It is noted that as an alternative source of income to hedge against unpredictable weather conditions, KSG Agro used its agricultural equipment and expertise to provide tillage and similar land preparation services to other crop producers for a total of $2.5 million compared to $1.3 million in 2022.
Due to lower prices for agricultural products and higher sales costs, the gross profit of the agricultural holding fell 6.6 times last year to $0.48 million, and also recorded an operating loss of $1.62 million and negative EBITDA of $0.40 million, while a year earlier these indicators were positive – $0.44 million and $1.79 million, respectively.
It is also indicated that due to lower exchange rate losses, the total loss in 2023 decreased even more significantly – to $1.21 million from $4.31 million a year earlier.
According to the report, KSG Agro managed to almost halve its net debt last year to $15.63 million from $27.46 million due to a reduction in bank loans to $15.84 million from $27.74 million. The agricultural holding’s free cash flow at the end of 2023 was $0.21 million compared to $0.27 million a year earlier.
During the first quarter of 2024, the group repaid a total of $4.28 million of its existing loans from TAScombank and received new tranches totaling $2.30 million, as well as issued series C and D bonds of its key operating subsidiary KSG Dnipro for approximately $5 million, of which it placed series C bonds for $1.4 million.
The number of permanent employees of the agricultural holding decreased in 2023 to 234 from 274 a year earlier.
It is noted that the group expects the winter crop harvest in 2024 to be at least average.
As for pig farming, it is indicated that during 2023 KSG Agro gradually reduced the massive number of pigs at the farm in Niva Trudova. The main reasons were concerns about the general safety and biosecurity of the herd, as well as changes in the group’s strategy and general market conditions: less herd, more farms – to reduce the risk of losing the entire pig population in the event of a missile or drone strike, the agricultural holding began to distribute the herd to several locations.
The group’s management is currently negotiating ways to expand the number of farms under its management, either through a partnership program with other pig farmers or by leasing or buying additional farms, the report says.
It also indicates that, based on the results of the trials, most of the low-productivity sows were gradually removed from the main herd and sold during the year, and to replace them, KSG Agro is purchasing new sows of Canadian genetics, in particular, it plans to purchase another batch later in 2024. The fresh Canadian genetics are expected to enable the group to produce high-quality piglets that will be sold as piglets rather than being raised further on the group’s farms. It should also shorten the group’s production cycle, further reducing overall safety and biosecurity risks.
KSG Agro, a vertically integrated holding company, is, according to him, one of the top 5 pork producers in Ukraine. It is also engaged in the production, storage, processing and sale of grains and oilseeds. Its land bank is about 21 thousand hectares in Dnipropetrovska and Kherson regions.
KSG Agro earned $1.34 million in net profit in January-September 2023, up almost 14 times compared to the same period in 2022. Its EBITDA for the three quarters of 2023 increased by 67% to $4.54 million, and revenue increased by 16% to $11.9 million.
