RNS Number : 2763G
Ros Agro PLC
14 November 2022
 

 

 

14 November 2022

 

ROS AGRO financial results for 9M 2022 and 3Q 2022

 

14 November 2022 - Today ROS AGRO PLC (the Company), the holding company of Rusagro Group (Rusagro), a leading Russian diversified food producer with vertically integrated operations, has announced the financial results for the nine months ended 30 September 2022.

 

 

9M 2022 HIGHLIGHTS

 

-     Sales amounted to RUB 182,027 million (US$ 2,535 million1), an increase of RUB 24,451 million (+16%) compared to 9M 2021;

-     Adjusted EBITDA2 amounted to RUB 35,371 million (US$ 493 million), an increase of RUB 4,649 million (+15%) compared to 9M 2021;

-     Adjusted EBITDA margin remained on the same level of 19% in 9M 2022 and 9M 2021;

-     Net profit for the period amounted to RUB 1,337 million (US$ 19 million), a decrease of RUB 34,085 million;

-     Net debt position3 as of 30 September 2022 amounted to RUB 104,501 million (US$ 1,820 million);

-     Net Debt/Adjusted EBITDA (LTM4) as of 30 September 2022 was 1.98.

 

Commenting on the results, Timur Lipatov, CEO of Rusagro, said:

 

"During the time of unstable economic environment Rusagro demonstrated its resilience. Its net revenue and adjusted EBITDA for 9M 2022 increased by 16% (+RUB 24,451 million) and 15% (+RUB 4,649 million) respectively with adjusted EBITDA margin remaining flat in time of increasing pressure from cost of sales growth. These results were driven by higher sales volumes of sugar, pork products, as well as sugar beet, corn, sunflower seeds and meal. Sales growth was possible due to the launch of vertically integrated pork production cluster in Primorsky Krai, start of the wheat export trading operations and positive market dynamics on the Russian sugar market. In comparison to 9M 2021 net profit decreased, as it was negatively influenced by forex losses and revaluation of biological assets on the back of dropping market prices and rising costs of sales.''

 


Key consolidated financial performance indicators

in RUB million

Nine months ended

Variance

Three months ended

Variance

30 September 2022

30 September 2021

Units

%

30 September 2022

30 September 2021

Units

%

Sales

 182,027

 157,576

24,451

 16

 54,796

 53,204

 1,592

 3

Gross profit

 40,103

 44,885

(4,782)

(11)

 7,517

 20,506

(12,989)

(63)

Gross margin, %

22%

28%

(6) pp

 

14%

39%

(25) pp

 

Adjusted EBITDA

 35,371

 30,722

 4,649

 15

 5,211

 8,603

(3,392)

(39)

Adjusted EBITDA margin, %

19%

19%

0 pp

 

10%

16%

(6) pp

 

Net profit for the period 1

 1,337

 35,422

(34,085)

(96)

 1,170

 17,822

(16,652)

(93)

Net profit margin %

0%

22%

(21) pp

 

2%

33%

(31) pp

 

 

Sales volume of Rusagro products in 9М and 3Q 2022

in thousand tonnes

Nine months ended

Variance

Three months ended

Variance

30 September 2022

30 September 2021

Units

%

30 September 2022

30 September 2021

Units

%

Sugar

 636

 541

 95

18

 199

 179

 19

11

Pork products

 205

 182

 22

 12

 72

 61

 10

 17

Agriculture crops, incl.

 1,382

 1,537

(155)

(10)

 881

 964

(83)

(9)

Sugar beet

 788

 720

 68

 9

 730

 720

 10

 1

wheat

 292

 583

(291)

(50)

 98

 223

(125)

(56)

soybean

 145

 161

(17)

(10)

 28

 19

 9

 50

corn

 135

 58

 77

 134

 25

 -

 25

 0

sunflower seeds

 21

 8

 13

 169

 1

 0

 0

 0

barley

 0

 7

(6)

(95)

 0

 2

(2)

(92)

Oil and fat products, incl.

 1,199

 1,257

(58)

(5)

 407

 423

(15)

(4)

meal

 470

 443

 27

 6

 171

 138

 33

 24

crude oil

 284

 319

(35)

(11)

 84

 121

(37)

(30)

industrial fats

 213

 239

(26)

(11)

 72

 83

(11)

(14)

dry whey mixes

 13

 11

 2

 14

 4

 4

 0

 7

consumer oil & fat products

 207

 234

(27)

(11)

 71

 72

(1)

(1)

consumer dairy products

 11

 10

 1

 10

 4

 4

 0

 6

KEY CONSOLIDATED CASH FLOW INDICATORS (NOT IFRS PRESENTATION*)

The key consolidated cash flow indicators presented according to management accounts methodology

in RUB million

Nine months ended

Variance

Three months ended

Variance

 30 September 2022

 30 September 2021

Units

%

 30 September 2022

 30 September 2021

Units

%

Net cash from operating activities, incl.

 7,918

 32,255

(24,337)

(75)

 8,625

 10,907

(2,282)

(21)

Operating cash flow before working capital changes

 32,427

 30,312

 2,115

 7

 3,656

 7,570

(3,914)

(52)

Working capital changes

(22,995)

 3,467

(26,463)

 -

 5,256

 4,225

 1,031

 24

Net cash from investing activities, incl.

(6,752)

(37,078)

 30,326

 82

(2,790)

(19,667)

 16,877

 86

Purchases of property plant and equipment and inventories intended for construction

(7,642)

(8,816)

 1,174

(3,015)

(2,594)

(422)

(16)

Acquisition of SolPro assets

 -

(28,735)

 28,735

 -

 -

(17,046)

 17,046

 -

Net cash from financing activities

 28,748

 50,108

(21,359)

(43)

(10,392)

 13,735

(24,127)

 -

Net effect of exchange rate changes on cash and cash equivalents

(17,177)

(187)

(16,990)

(9,103)

 1,819

(85)

 1,903

 -

Net increase / (decrease) in cash and cash equivalents

 12,738

 45,098

(32,360)

(72)

(2,738)

 4,890

(7,628)

 -

 

(*) See Appendix 3

The key investments in property, plant and equipment and inventories intended for construction during 9M 2022 were made in the Meat segment in the amount of RUB 2,802 million (9M 2021: RUB 4,916 million) mainly due to the purchases related to the construction project in the Russian Far East. Investments in the Agriculture segment in the amount of RUB 2,255 million (9M 2021 : RUB 1,885 million), Oil and Fat segment in the amount of RUB 1,934 million (9M 2021 : RUB 1,266 million excluding acquisition of SolPro assets), and Sugar segment in the amount of RUB 651 million (9M 2021 : RUB 749 million) mainly relate to purchases of machinery and equipment for production facilities renewal and maintenance.

 

Debt position and liquidity management

in RUB million

30 September 2022

31 December 2021

Variance

Units

%

Gross debt

246,256

172,724

73,532

43

Short-term borrowings

183,260

108,749

74,511

69

Long-term borrowings

62,996

63,975

(979)

(2)

Cash and cash equivalents, bank deposits and bonds

(141,755)

(99,315)

(42,440)

(43)

Short-term cash, deposits and bonds

(107,334)

(65,344)

(41,990)

(64)

Long-term cash, deposits and bonds

(34,421)

(33,971)

(450)

(1)

Net debt

104,501

73,409

31,092

42

Short-term borrowings, net

75,926

43,405

32,521

75

Long-term borrowings, net

28,575

30,004

(1,429)

(5)

Adjusted EBITDA (LTM4)

52,709

48,060

4,649

10

Net debt/ Adjusted EBITDA (LTM)

1.98

1.53

0.5 pp

 

 

Net finance income/ (expense)

in RUB million

Nine months ended

Variance

Three months ended

Variance

30 September 2022

30 September 2021

Units

%

30 September 2022

30 September 2021

Units

%

Net interest expense

(3,317)

(2,507)

(810)

(32)

(1,803)

(1,213)

(590)

(49)

Gross interest    expense

(8,428)

(3,774)

(4,654)

(123)

(3,873)

(1,989)

(1,884)

(95)

Reimbursement of interest expense

 5,111

 1,267

 3,844

 303

 2,070

 776

 1,294

 167

Interest income

 4,348

 3,723

 625

 17

 2,040

 1,903

 136

 7

Net gain/ (loss) from bonds held for trading

 -

(1)

 1

 -

 -

(1)

 1

 -

Other financial expenses, net

(19,682)

(163)

(19,519)

(11,945)

(11,797)

(143)

(11,654)

(8,139)

Net foreign exchange gain/ (loss)

(19,551)

 28

(19,579)

 -

(11,723)

 60

(11,783)

 -

Other financial income / (expenses), net

(131)

(192)

 60

 32

(74)

(203)

 129

 63

Total net finance income/ (expenses)

(18,651)

 1,051

(19,702)

 -

(11,560)

 546

(12,106)

 -

 



 

Net debt increased at 30 September 2022 compared at 31 December 2021 as a result of an increase in short-term borrowings.

In 9M 2022 Rusagro continued to enjoy benefits from the state agriculture subsidies programme. Rusagro continued to receive bank loans with decreased preferential interest rates under the programme of government support. Under this programme, the government provides subsidies to the banks to compensate the loss of income on borrowings with decreased interest rates, given by the banks to agricultural producers. In 9M 2022 IFRS accounts these borrowings are accounted according to its face value with no adjustments to prevailing market rates. The differences between nominal and market interest rate is recognized as either government grants in a statement of financial position for borrowings received with the purpose to finance investment projects or interest expenses in a statement of comprehensive income for general purpose borrowings.

Net finance income of 9M 2021 in the sum of RUB 1,813 million changed to net finance expense in the amount of RUB 17,379 million in 9M 2022 mainly as the result of negative dynamics in forex losses in 9M 2022.

________________________________

(1) The exchange rates used for translation of RUB amounts into USD represent average Central Bank official exchange rate for the respective reporting period for income, expenses and profits and the Central Bank official exchange rate as at the reporting date for balance figures.

(2) Adjusted EBITDA is defined as operating profit before taking into account (i) depreciation included in operating profit, (ii) net gain/ (loss) on revaluation of biological assets and agricultural produce, (iii) non-recurring components of other operating income/ (expenses), net, (iv) share-based remuneration, (v) provision for impairment of loans issued (see Appendix 2 for the detailed calculation of Adjusted EBITDA). Adjusted EBITDA is not a measure of financial performance under IFRS. It should not be considered as an alternative to profit for the period as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited. We believe that Adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions of subsidiaries and other investments and our ability to incur and service debt.

(3) The Rusagro determines the net debt as short-term borrowings and long-term borrowings less cash and cash equivalents, bank deposits, bank promissory notes and bonds held for trading.

(4) LTM - The abbreviation for the "Last twelve months".



NOTE

ROS AGRO PLC (LSE, MOEX: AGRO) - a holding company of Rusagro Group, a leading Russian diversified food producer with vertically integrated operations in the following branches:

 

Agricultural:

Rusagro currently controls one of the largest land banks among Russian agriculture producers, with 659 thousand hectares of land under control located in the highly fertile Black Earth region of Russia (in the Belgorod, Tambov, Voronezh, Kursk, Orel regions) and in the Far East Primorye Region. Land and production sites are strategically located within
the same regions to optimize efficiency and minimize logistical costs. Rusagro is one
of the major sugar beet producers in Russia, but it also produces wheat and
corn, sunflower seeds and soybeans. These products are partially consumed by the Sugar, Meat and Oil and Fat segments, supporting a synergistic effect and lowering price change risk.

 

Oil and Fat:

Rusagro is the leading crude sunflower oil and consumer margarine producer, second largest industrial fats and mayonnaise producer in Russia with products sold under eleven key brands, such as EZhK, Schedroye Leto, Mechta Khozyaiki, umbrella brand Ya Lublu Gotovit (includes Moskovskiy Provansal, Novosibirskiy Provansal and Saratovskiy Provansal), Rossiyanka and Saratovskiy Slivochniy, Benefitto, Maslava and Leto Krasno (), which is sold on the Chinese market. Rusagro also produces dry industrial mixes, cheeses, butter and cream sold under three brands: Milie, Syrnaya Kultura and Ya Lublu Gotovit. Rusagro owns four crushing and two oil & fats plants and leases two milk processing plants. Owning its sunflower and soy oil production allows Rusagro to control the source of the sunflower and soybean oil required to produce oil and fats products.

 

Sugar:

Rusagro is one of the leading Russian sugar producers (№3 in Russia and №1 on cube white sugar market), producing sugar from sugar beet at nine production sites in four regions. Group produces white and brown sugar sold under the brands Russkii Sakhar, Chaikofsky, Mon Cafeand Brauni. The Sugar segment is vertically integrated and sugar beets are supplied by Rusagro's Agriculture segment, which ensures a consistent supply. The sugar segment also operates a cereal plant and sells buckwheat and rice under the brand Tyoplye Traditsii.

 

Meat:

Rusagro is №4 largest pork producer in Russia. It operates large commercial pig breeding complexes adhering to best practices regarding biosecurity standards, nucleus farms, compound feed plants, slaughterhouses and meat processing plants in Tambov and Belgorod Regions and in the Russian Far East. Since 2016, Rusagro sells retail products under its own brand Slovo Myasnika (Butcher's word).

 

 

 

CONFERENCE CALL

Rusagro management is organizing a conference call on Company's 9M and 3Q 2022 financial results for investors and analysts.

Details of the call:

Date:

14 November 2022

Time:

4:00 PM (Moscow) / 1:00 PM (London)

Subject:

ROS AGRO PLC 3Q and 9M 2022 Financial results

 

 

 

Registration

(available up to 3:00 PM Moscow time / 12:00 AM London time on 14 November):

https://us06web.zoom.us/webinar/register/WN_zoIP53dySEWNfkBZS2golw

 

 

FORWARD-LOOKING STATEMENTS

This announcement includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements do not relate to historical or current events,
or to any future financial or operational activity of the Group.

 

By their nature, forward-looking statements involve risk and uncertainty because they relate
to future events and circumstances, a number of which are beyond the Rusagro Group's control. As a result, actual future results may differ materially from the plans and expectations set out
in these forward-looking statements.

 

The Group undertakes no obligation to release the results of any revisions to any forward-looking statements that may occur due to any change in its expectations or to reflect events
or circumstances after the date of this document.

 

 

CONTACTS

 

Svetlana Shakaryan (Kuznetsova)

IR & ESG Director

Phone:  +7 495 363 1661

E-mail: ir@rusagrogroup.ru

 

 

Appendix 1. Consolidated statement of comprehensive income for the Nine and Three months ended 30 September 2022 (in RUB thousand)

 


Nine months ended
30
September

Three months ended
30
September

 

2022

2021

2022

2021

 





Sales

182,026,606

157,576,090

54,796,326

53,204,321

Net gain / (loss) on revaluation of biological assets and agricultural produce

(2,087,230)

10,570,007

(239,057)

11,004,819

Cost of sales

(139,836,326)

(123,260,634)

(47,040,326)

(43,702,667)

Net gain / (loss) from trading derivatives

-

(5)

-

-

Gross profit

40,103,050

44,885,458

7,516,943

20,506,473

 





Distribution and selling expenses

(10,968,875)

(5,704,363)

(3,608,134)

(1,386,012)

General and administrative expenses

(6,735,396)

(8,322,598)

(2,465,036)

(3,681,761)

Other operating income/(expenses), net

(4,098,301)

1,201,562

(594,972)

168,752

Reversal of provision/(provision) for impairment of loans issued

-

3,649,567

-

1,797,273

Operating profit

18,300,478

35,709,626

848,801

17,404,725

 





Interest expense

(5,775,676)

(4,002,929)

(2,458,290)

(1,495,908)

Interest income

6,549,397

6,307,773

2,201,212

2,585,169

Net gain / (loss) from bonds held for trading

42

(2,362)

-

(1,000)

Other financial income/ (expenses), net

(18,151,908)

(489,739)

1,530,584

(326,330)

Profit / (loss) before taxation

922,333

37,522,369

2,122,307

18,166,656

 





Income tax expense

414,389

(2,100,271)

(951,986)

(345,043)

Profit for the period

1,336,722

35,422,098

1,170,321

17,821,613

 





Other comprehensive income:

 




Total comprehensive income/ (loss) for the period

 1,336,722

 35,422,098

 1,170,321

 17,821,613

 





Profit / (loss) is attributable to:

 




Owners of ROS AGRO PLC

 1,296,521

 35,441,460

 1,129,402

 17,819,894

Non-controlling interest

 40,201

(19,362)

 40,919

 1,719

Profit / (loss) for the period

 1,336,722

 35,422,098

 1,170,321

 17,821,613

 





Total comprehensive income/ (loss) is attributable to:

 



Owners of ROS AGRO PLC

 1,296,521

 35,441,460

 1,129,402

 17,819,894

Non-controlling interest

 40,201

(19,362)

 40,919

 1,719

Total comprehensive income/ (loss) for the period

 1,336,722

 35,422,098

 1,170,321

 17,821,613

 





Earnings per ordinary share for profit attributable to the equity holders of ROS AGRO PLC, basic and diluted (in RR per share)

48.19

1,317.22

41.98

662.30

 


Appendix 2. Consolidated statement of financial position as at 30 September 2022
(in RUB thousand)

 

 


30 September 2022

31 December 2021

ASSETS

 


Current assets

 


Cash and cash equivalents

59,199,907

46,462,179

Restricted cash

32

47

Short-term investments

64,890,345

21,001,760

Trade and other receivables

22,053,359

12,558,401

Prepayments

11,141,171

5,414,032

Current income tax receivable

995,192

1,532,726

Other taxes receivable

12,916,554

8,321,193

Inventories and short-term biological assets

79,028,575

77,509,033

Total current assets

250,225,135

172,799,371

 



Non-current assets

 


Property, plant and equipment

120,828,896

119,159,412

Inventories intended for construction

956,361

1,604,570

Right-of-use assets

6,981,451

7,346,538

Goodwill

2,364,942

2,364,942

Advances paid for non-current assets

5,474,064

7,355,467

Long-term biological assets

4,389,147

2,744,863

Long-term investments and receivables

42,970,649

42,527,657

Investments in associates

455,916

359,782

Deferred income tax assets

7,545,290

4,835,268

Other intangible assets

1,526,228

1,144,057

Other non-current assets

75,451

79,125

Total non-current assets

193,568,395

189,521,681

Total assets

443,793,530

362,321,052

 

 


LIABILITIES and EQUITY

 

 

Current liabilities

 


Short-term borrowings

183,260,279

108,748,840

Lease liabilities

1,162,772

1,130,831

Trade and other payables

15,836,612

15,440,635

Provisions

245,462

494,709

Current income tax payable

197,104

464,471

Other taxes payable

12,644,731

7,454,558

Total current liabilities

213,346,960

133,734,044

 



Non-current liabilities

 


Long-term borrowings

62,995,825

63,975,025

Government grants

10,627,190

9,325,530

Lease liabilities

5,222,242

5,535,014

Deferred income tax liability

2,388,371

1,876,244

Total non-current liabilities

81,233,628

80,711,813

Total liabilities

294,580,588

214,445,857

 



Equity

 


Share capital

12,269

12,269

Treasury shares

(490,607)

(490,607)

Additional paid-in capital

26,964,479

26,964,479

Other reserves

1,363,177

1,363,177

Retained earnings

121,377,853

120,080,307

Equity attributable to owners of ROS AGRO PLC

149,227,171

147,929,625

Non-controlling interest

(14,229)

(54,430)

Total equity

149,212,942

147,875,195

Total liabilities and equity

443,793,530

362,321,052

 

 



Appendix 3. Consolidated statement of cash flows the Nine months ended 30 September 2022 (in RUB thousand) - NOT IFRS PRESENTATION (*)


Nine months ended

 

30 September 2022

30 September 2021

Cash flows from operating activities

 


Profit/(loss) before income tax

 922,333

 37,522,370

Adjustments for:

 


Depreciation and amortization

 10,844,824

 9,434,299

Interest expense

 14,932,317

 7,324,543

Government grants

(10,131,758)

(5,238,990)

Interest income

(6,549,396)

(6,307,773)

Loss/ (gain) on disposal of property, plant and equipment

(467,203)

(66,677)

Net (gain) / loss on revaluation of biological assets and agricultural produce

 2,087,230

(10,570,007)

Change in provision for impairment of loans issued

(3,385)

(3,649,739)

Interest expense on leases

 420,998

 370,436

Realised deferred day-one gain

 -

(529,893)

Change in provision for net realisable value of inventory

 646,480

 1,017,409

Change in provision for impairment of receivables and prepayments

 52,771

 577,580

Foreign exchange (gain) / loss, net

 20,856,051

(36,965)

Lost / (reversal of) harvest write-off

 24,797

 237,476

Net (gain) / loss from bonds held for trading

(42)

 2,362

Change in provision for impairment of advances paid for property, plant and equipment

(14,205)

(38,260)

Change in other provisions

(249,247)

 622,072

Dividend income

(397,125)

(377,269)

Loss on disposal of other assets

(21,698)

 -

Gain on SolPro loans redemption

(466,330)

 -

Other non-cash and non-operating expenses, net

(60,661)

 19,269

Operating cash flow before working capital changes

 32,426,754

 30,312,242

Change in trade and other receivables and prepayments

(19,210,644)

(7,824,401)

Change in other taxes receivable

(4,595,361)

(4,048,993)

Change in inventories and short-term biological assets

(5,424,747)

 7,983,147

Change in trade and other payables

 737,498

 2,264,641

Change in other taxes payable

 5,497,786

 5,092,643

Cash generated from operations

 9,431,285

 33,779,279

Income tax paid

(1,512,818)

(1,524,306)

Net cash from operating activities

 7,918,467

 32,254,973

 



 

Appendix 3 (continued). Consolidated statement of cash flows the Nine months ended 30 September 2022 (in RUB thousand) - NOT IFRS PRESENTATION (*)


Nine months ended

 

30 September 2022

30 September 2021

Cash flows from investing activities

 


Purchases of property, plant and equipment including SolPro assets acquisition

(7,433,806)

(37,151,209)

Purchases of other intangible assets

(690,318)

(448,233)

Purchases of land lease rights

(24,968)

(36,933)

Proceeds from sales of property, plant and equipment

 479,519

 260,298

Purchases of inventories intended for construction

(208,440)

(399,645)

Purchases of associates

(96,134)

(102,000)

Movement in restricted cash

 -

 140,895

Dividends received

 722,768

 377,331

Other investing activities

 499,129

 281,501

Net cash from investing activities

(6,752,250)

(37,077,995)

Cash flows from financing activities

 


Proceeds from borrowings

 99,630,403

 96,623,976

Repayment of borrowings

(28,134,987)

(23,593,441)

Interest paid

(4,842,909)

(3,098,985)

Change in cash on bank deposits

(29,691,928)

(28,000,000)

Proceeds from sales of bonds with maturity over three months*

 140,783

 220,282

Loans given*

(15,445,102)

(728,269)

Loans repaid*

 1,377,321

 20,698,888

Interest received*

 5,512,854

 5,570,976

Proceeds from government grants

 636,607

 1,935,018

Dividends paid to owners Ros Agro PLC

(410)

(19,417,565)

Repayment of lease libilities - principal

(435,240)

(58,706)

Other financial activities

 722

(44,645)

Net cash from  financing activities

 28,748,114

 50,107,529

Net effect of exchange rate changes on cash and cash equivalents

(17,176,603)

(186,644)

Net increase/ (decrease) in cash and cash equivalents

 12,737,728

 45,097,863

Cash and cash equivalents at the beginning of the period

 46,462,179

 11,866,798

Cash and cash equivalents at the end of the period

 59,199,907

 56,964,661

 

 

 (*) For the purpose of conformity with the methodology of the Group's net debt calculation investments in financial assets related to financial activities are presented in Cash flows from financing activities in the Group's management accounts.

 

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