In January-June 2021, the KSG Agro agricultural holding increased its net profit 48 times, year-over-year, to $13.7 million, of which the group of companies received $12.86 million through the sale of a number of its assets.
According to the holding’s statement on the website of the Warsaw Stock Exchange on Sunday, its revenue for the specified period decreased by 12%, to $6.81 million.
“In May 2021, the group sold its subsidiaries Soyuz-3 LLC, Agrofirma Vesna LLC, UAIH Trading House LLC. Agrofirma Vesna LLC and UAIH Trading House LLC are inactive organizations. Soyuz-3 LLC is a production organization engaged in crop production, but acquired with large commitments and remains outside the group’s ownership structure until such obligations are settled,” the company said in a statement.
It is specified that proceeds from the disposal of the subsidiary company Soyuz-3 LLC (Novopokrovka, Dnipropetrovsk region) from the agricultural holding amounted to $6.5 million, UAIH Trading House LLC some $4.27 million, Agrofirma Vesna LLC some $2.01 million.
KSG Agro for the reporting period reduced gross profit by 27%, to $2.48 million, operating profit by 28%, to $1.89 million, its EBITDA decreased by 22%, to $2.69 million.
According to the statement, the company in the first half of the year reduced profit in the crop segment by 37%, to $1.46 million, in the livestock segment by 19.4%, to $ 700,000, while in the segment “other operations” (production of fuel pellets and heat energy) increased by almost 44.5%, to $310,000.
“In 2021, the group started a project to gradually renew the sow population in Ukraine to increase the birth rate of piglets. To this end, the group is negotiating with Suisag, a Swiss pig genetics company, and Genesus, a Canadian genetic company. As of the date of these financial statements, the group expects to receive first batches of sows from Genesus,” the company said in the statement.
The agricultural holding said in the report that it is considering an international investment project with several partners to build a breeding pig farm in Kazakhstan for 50,000 pigs with an estimated total cost of EUR 30 million.
At the same time, KSG Agro said the total debt of the group of companies in U.S. dollars as of June 30, 2021 decreased by almost 44.5%, year-over-year, to $15.3 million, while it increased from UAH 82,000 to UAH 14.8 million
“In 2020, the group has already managed to increase its net current assets from negative $23.5 million as of January 1, 2020 to negative $6.3 million as of December 31, 2020. The group plans to complete the second phase of the process by the end of 2021, bringing net current assets to a positive value. As of June 30, 2021, the total balance of ‘other financial liabilities’ compared to December 31, 2020 decreased even more,” the group said.
According to the report, the majority shareholder and head of the board of directors of the agricultural holding KSG Agro Serhiy Kasianov, who owns it through Olbis Investments Ltd. (Panama), on August 2, sold 1 million shares (6.66%) of the group of companies to two legal entities with Polish jurisdiction, after the transaction, the share of Olbis Investments Ltd. amounted to 57.96% of the charter capital.
The vertically integrated holding KSG Agro is engaged in pig breeding, as well as in the production, storage, processing and sale of grain and oilseeds. Its land bank is about 21,000 hectares.
According to the agricultural holding itself, it is one of the top five pork producers in Ukraine.
The major shareholder and the head of the board of directors of KSG Agro agricultural holding, Serhiy Kasyanov, who owns it through Olbis Investments Ltd. (Panama), on August 2 sold one million shares (6.66%) of the group of companies to two legal entities with Polish jurisdiction, after the transaction the share of Olbis Investments Ltd. amounted to 57.96% of the charter capital.
The press service of the agricultural holding told Interfax-Ukraine about this transaction on August 4.
“The buyers were Polish companies together with beneficiaries in the European Union. Within a few days we will agree on all the formalities and will be ready to jointly inform the market about our future plans,” the press service quoted Kasyanov as commenting on the deal.
He explained that prior to the conclusion of the agreement, Olbis Investments Ltd. owned 9.7 million shares of KSG Agro S.A (Switzerland), the parent company of the Ukrainian agricultural holding, which accounted for 64.62% of its charter capital. Following the transaction, the Panamanian company owns 8.7 million shares of KSG Agro S.A (57.96%).
The press service of the agricultural holding emphasized that through this transaction, KSG Agro intends to attract investors to the development of meat processing facilities and to enter the markets for finished livestock products.
“The selling price of the shares has not been disclosed, but it is not lower than the market price and corresponds to the weighted average price of the holding’s shares on the Warsaw Stock Exchange (WSE) over the past few months. The buyers of the shares were two companies with Polish jurisdiction, whose names have not yet been disclosed,” the press service said.
Thus, according to the three-month dynamics of the value of shares of the agricultural holding presented on the WSE website, the investments attracted by it can roughly range from PLN 3.21 million ($ 834,000 at the current exchange rate) to PLN 4.49 million ($ 1.17 million).
The founder and majority shareholder of the Ukrainian agricultural holding KSG Agro Serhiy Kasianov plans to build a pig-breeding complex in Kazakhstan for 200,000 heads, investments will amount to $50 million, the press service of the company told Interfax-Ukraine on Thursday.
“Kazakhstan has an advantageous geographical position, a land border with China. There is no African swine fever, which today is the main obstacle for many countries in the world to export pork to the Chinese market. There is a great interest of the government of Kazakhstan in supporting and creating conditions for such a project, but there are no people with experience in creating such enterprises from scratch. KSG Agro has both qualified personnel and experience in raising purebred pigs,” the press service of the company quoted Kasianov as saying.
The press service of the agricultural holding said that the Swiss companies participating in the project will supply technologies and animals of Swiss genetics to Kazakhstan. In particular, one of the investors is KS Genetic (Switzerland), which is chaired by Filippo Lombardi, ex-chairman of the Council of States of Switzerland.
The project of the livestock complex includes two sow farms with 4,000 sows each, which will make it possible to keep 200,000 heads of pigs per year, as well as a feed mill. The annual design production capacity is about 20,000 tonnes of meat.
According to Kasianov, the prospective markets for the products are China, Vietnam and South Korea.
The press service of KSG Agro said that it is not yet planned to attract credit or own funds of the Ukrainian agricultural holding for the implementation of the Kazakh project.
Currently, negotiations are underway with a number of potential investors on financial participation in the Kazakh project. The issue of attracting investors to the charter capital of KSG Agro for the development of the company’s meat processing facilities and its entry into new markets for finished products of the livestock industry is also being discussed.
KSG Agro in 2020 cut its net profit by 68.8% compared to 2019, to $1.27 million, while increasing EBITDA by 2.9 times, to $6.02 million.
According to the audited report of the holding, published on Friday evening on the website of the Warsaw Stock Exchange, its revenue over the past year decreased 11%, to $21.34 million.
At the end of 2020, KSG Agro increased its gross profit 2.4 times, to $6.25 million, and operating profit 10.5 times, to $4.35 million.
The company said that the crop yield in 2020 increased by 5.2% compared to 2019 – up to 40,000 tonnes, while the wheat crop increased by a quarter, to 17,900 tonnes, rapeseed – 2.4 times, to 2,730 tonnes, sunflower harvest decreased by 9.7% – to 11,700 tonnes.
“The total area of agricultural land used by the group as at 31 December 2020 is 21,000 hectares, of which 10,000 hectares are currently under winter crops and are expected to yield a total of 23,60 tonnes of wheat, barley and rapeseed at harvest. The group manages to maintain crop farming revenue at comparable levels to pig breeding, but because crops are exposed to weather conditions, revenues from pig breeding are still considered by management to be more reliable and remain the key strategic focus,” KSG Agro said in the report.
According to the agricultural holding, its revenue from the livestock segment in 2020 decreased by 8% compared to 2019 reaching $10.3 million, while the food processing segment brought the company 22% less, and amounted to $8.4 million. The total marketable pig number of the company as of December 31, 2020 increased by 7.8% compared to December 31, 2019, to 41,416 heads.
“Current year harvest was comparable to the previous year, so the relative decrease in sales is mostly attributable to the general slowing down in business when the first coronavirus prevention measures were introduced, and people were beginning to adapt to the new reality. After that, demand for crops and pork, as well as other goods used to manufacture food products, returned to the previous levels,” the company said in the report.
According to the company, there had been no significant impact of the COVID-19 pandemic on the group’s profitability position so far. The pandemic is not expected to have an immediate material impact on business operations.
KSG Agro agricultural holding expects grain harvest in Ukraine to grow by an average of 10-15% compared to 2020, and one of the best harvests for the agricultural holding, owner of the agricultural company Serhiy Kasyanov has said in a press release from the company.
“Now we are primarily talking about winter crops, but I do not see any problems with spring crops either. Perhaps we will move somewhere in time and harvest the sunflower not in September, but in October. But this will not significantly affect the results. We, for example, predict that in our agricultural holding it will be one of the best harvests in recent years,” he said.
According to the farmer, the harvest forecast is very optimistic throughout the country, even in traditionally arid regions.
As reported, KSG Agro is a vertically integrated holding engaged in pig breeding, production, storage, processing and sale of grain and oilseeds. The land bank of the agricultural holding is 23,900 hectares in Dnipropetrovsk and Kherson regions.
KSG Agro in 2020 reduced its net profit by 3.2 times compared to 2019, to $1.27 million, increased EBITDA by 3.1 times, to $6.532 million, its revenue over the past year decreased by 11%, to $21.34 million.
Revenue from the livestock segment in 2020 decreased by 8%, to $10.3 million, while the food processing segment brought in 22% less and amounted to $8.4 million.
The KSG Agro agricultural holding completed January-March 2021 with a net profit of $750,000 versus $3.02 million of a net loss for the same period in 2020.
According to the holding’s report on the Warsaw Stock Exchange website, its revenue over this period increased by 9%, to $3.52 million, and the company’s EBITDA by 21%, to $1.39 million.
According to the results of the first quarter, KSG Agro increased its gross profit by 18% compared to the first quarter of 2020, to $1.26, operating profit by 39%, to $1.01 million.
“As of the date of these financial statements, the total balance of ‘other financial liabilities’ as of December 31, 2020 decreased by an additional $9.4 million, with the current portion of this amount being $3.4 million. Liabilities were partially settled in cash and partially due to disposal subsidiaries Agrarian Firm Vesna LLC, Trading House UAIH LLC and Soyuz-3 LLC,” the agricultural holding said in the financial statements.
According to the agricultural producer, the retirement of three subsidiaries from the agricultural holding led to an increase in its consolidated capital from a negative value of $6.2 million “closer to a positive value.”
According to KSG Agro Board Chairman Serhiy Kasyanov, the main factors behind the growth of financial indicators were a decrease in unproductive costs, as well as an increase in demand for pork in the first quarter of 2021 after a drop in prices at the end of 2020.
The total revenue of KSG Agro from pig breeding and meat processing in the first quarter of 2021 amounted to $2.51 million, almost at the level of the same reporting period of 2020 ($2.56 million).
KSG Agro’s revenue from agricultural crops production amounted to $ 840,000 (versus $100,000 in January-March 2020). The company said that as an alternative source of income, KSG Agro used its equipment and experience to provide services for the preparation and processing of land for other agricultural producers, which brought in $720,000 in revenue.
According to the financial statements, coronavirus (COVID-19) pandemic did not have a significant impact on the profitability of the agricultural holding, it is expected that the event in the future will not have a significant impact on its business operations in future periods.
The company’s spring sowing campaign started in early April as scheduled. The plans of the spring sowing campaign are to sow 7,100 hectares with wheat, some 1,860 hectares with rapeseed and some 1,180 hectares with barley. The pig stock of the company in the first quarter of 2021 decreased by 1.7%, to 40,720 pigs.
According to the Association of Ukrainian Pig Breeders, the agricultural holding in 2020 took 11th place in the rating of Ukrainian pork producers (the rating was compiled on the basis of data on the total breeding stock of pigs), having sold 11,760 tonnes of pork in live weight over the year.