Operating profit was more than doubled to € 91.9 million before exceptional items, with slight easing in revenue to € 2.0 billion.
The cost reduction programmes that we initiated showed their effect. We achieved attractive earnings and considerable free cashflow in 2009|10. On slightly lower revenue of about € 2.0 billion, we more than doubled pre-exceptionals operating profit to € 91.9 million (from € 37.8 million in the previous year) and thus restored profitability to near the good results recorded before the 2008|09 financial year. The cashflow trend also enabled us to further reduce net debt by 20% to € 376.6 million.
We were able to demonstrate that AGRANA can generate good profits even in as difficult an economic setting as the one witnessed last year. Our diversification strategy, built on three business segments, has proved highly resistant to crisis. AGRANA has shown itself to be a dependable partner both to its customers and the agricultural sector. Especially in volatile economic times, AGRANA’s stability represents a critical strength that is beneficial for all stakeholders.
As the economic environment remains challenging, we have taken further measures to ensure we are well prepared for the future. As a notable example, at the beginning of the year under review we launched an organisational functional streamlining with the goal of identifying and reaping synergies between the individual segments. Internal processes were simplified and harmonised, duplications in structure eliminated and efficiency boosted as a result. This project is well underway and will bear dividends in the present 2010 |11 financial year. Also, our capital expenditure will remain well below depreciation for a further year, and this restraint will further increase our financial flexibility.
Sugar segment
In the Sugar segment, sales volume rose while revenue eased by 2.6% to € 684.1 million (prior year: € 702.5 million) as a result of the price reductions that accompanied the reform of the EU sugar regime. The Sugar segment generated an operating profit of € 15.2 million before exceptional items (prior year: € 15.8 million). With the EU sugar market reform concluded, AGRANA is well-positioned strategically, particularly as many Eastern European countries where AGRANA holds important market positions became net importers. The profitability of the Sugar segment will improve in the long term thanks to efficiency gains and the absence of further sugar regime restructuring levies.
Starch segment
Sales quantities in the Starch segment continued to be pushed up in the 2009|10 financial year. The significant price decline in principal products and co-products led to a revenue decrease of about 4%, from the prior year’s € 519.4 million to € 499.2 million. The bioethanol activities realised substantial revenue growth through the full utilisation of the bioethanol capacity in Austria and Hungary and the by-product sales of “ActiProt” high-protein feed. With the start-up years behind it, the bioethanol business now generates profits. Overall, the Starch segment’s operating profit before exceptional items rose to € 41.1 million (prior year: € 27.5 million).
Fruit segment
We were able to stabilise revenue in the AGRANA Fruit division (fruit preparations) in 2009|10, and profitability rallied. We achieved this through the streamlining of production processes and good sales in the USA, Asia, Australia and the Eastern European countries. In the Juice division, AGRANA’s very active marketing allowed sales volumes of fruit juice concentrates to be increased from one year earlier.
Newly entered sales regions helped to both lessen the dependence on the highly competitive Central and Western European markets and to better even out price fluctuations. Fruit segment revenue was € 805.9 million (versus € 804.4 million in the prior year) and segment operating profit before exceptional items was € 35.7 million (prior year: loss of € 5.5 million).
Outlook
Even if the signs of a stabilisation in the world economy grew more definite at the beginning of the current new financial year, it is too soon to sound the all-clear. In the Western industrialised countries in particular, we must expect an extended lean period and a slow pace of recovery. The aftermath of the 2008|09 financial crisis – weaker private consumption and a necessary belt-tightening in government spending – will make itself felt. The trend of greater volatility in commodity and raw materials markets will persist in the months to come.
The outlook in emerging markets remains favourable. The positive developments in Asia, Eastern Europe and parts of South America also confirm our expectation that the longterm growth trends for AGRANA remain intact. The shift in consumer preferences towards high-quality, healthful food and drink is promoted by the rising living standards and education in these countries and will be positive for the opportunities in our Fruit segment. The expanding consumer expenditure remains the growth driver in the Sugar and Starch segments, as well. After all, the inevitable growing scarcity and rising prices of petroleum and the climate impacts of the use of fossil fuels will continue to power the demand for biofuels.
For the 2010 |11 financial year our goal is, first and foremost, to ensure our healthy profitability through organisational improvements that will have long-term benefits, and through carefully considered acquisitions. This is to serve our aim of not only maintaining but continually expanding our market position where opportunities present themselves.
In closing, I wish to thank all those without whose consistent efforts and loyalty the good performance of our Group would not be possible: our staff, our customers, our suppliers and our shareholders.
Sincerely
Johann Marihart
Chief Executive Officer