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Ekosem-Agrar GmbH / Key word (s): Strategic Company Decision / Bond
14.11.2017 / 10:36
The issuer is responsible for the content of this announcement.
EkoNiva Group at Agritechnica 2017 in Hanover:
Ekosem-Agrar uses good conditions in Russia for further growth
Walldorf, November 14, 2017 - Ekosem-Agrar GmbH, the German holding company of the Ekoniva Group, which focuses on milk production in Russia, continued its growth course in 2017 against the backdrop of extremely good general conditions, in particular for milk production.
In the course of 2017, the dairy herd increased to around 39,400 animals (+44%) with a daily milk yield of over 900 tonnes (+50%). The milk price recovered significantly and is currently around 25% above the average level of the previous year at around 44 eurocents. The Russian government's subsidies and the increased interest of Russian banks in the domestic agricultural sector also ensure a good investment and financing environment. In addition, the general economic and political situation in Russia is also developing very positively.
The political focus is above all on subsidizing investments in dairy cattle factories. The very good promotion through low-interest loans and non-repayable investment grants, combined with the positive market situation in the milk sector, ensure that new businesses can generate a positive cash flow in a short time. For this reason, Ekosem-Agrar has decided to take advantage of the advantageous conditions and to continue to invest in the construction of dairy cattle farms. For the full year, Ekosem-Agrar is planning to complete three dairy cattle plants in the Kaluga, Voronezh and Novosibirsk regions for a total of around 8,800 dairy cows and an output of 240 tonnes of milk per day. Four further plants with a total capacity of approximately 14,400 dairy cows (approximately 400 tons of milk per day) in these regions are already under construction and will be completed in 2018. By the end of 2018, the dairy herd of the company is expected to grow to approximately 60,000 animals.
The expansion is supported by a strong team, which has grown by 22% to around 5,000 employees since the beginning of the year. Launched four years ago, the company's own training program promotes the great potential of young, motivated employees. Coupled with the many experienced specialists, Ekosem-Agrar is also well-placed in terms of personnel in order to further promote the growth of the company.
In Russia, there is a continuing strong structural change, in which very large farms buy up many small and medium-sized enterprises. However, the good economic conditions for large farms also lead to sharply rising land prices. In order to keep pace with this development, Ekosem-Agrar has already taken over a number of existing businesses this year and is holding talks on further acquisitions. Against the background of good financing options, the Group was able to expand its agricultural area by a total of 48,000 hectares over the course of the year so far to 248,000 hectares (+24%). Further takeovers are currently being discussed.
After initial successes in dairy processing and marketing, management has decided to expand this area as well and has taken two investment opportunities to existing processing companies near the Ekosem agricultural sites. In October, the group acquired a dairy including around 12,000 hectares of agricultural land and a dairy farm with approximately 3,000 cows in the Kaluga region. Currently, the takeover of another dairy in the Voronezh region is taking place. The company's own milk processing capacity for butter, milk powder and low-fat milk allows Ekosem-Agrar to react flexibly to variations in the raw milk market and take an even more active role in further strengthening its bargaining position with the food retail industry. The processing capacity of the company increases from 40 tons to 390 tons per day.
Stefan Dürr, Chief Partner and Managing Director of Ekosem-Agrar GmbH: "We are very pleased with the development of our company and are currently taking advantage of the favorable conditions for strategic investment to grow and expand our market leadership In 2021 and 2022, we have a firm eye on all our plans and are convinced that with the additional cash flows generated by the investments, we can more easily repay the bonds. "