Livestock update Q3 2014

Agrokultura AB (First North Stockholm: AGRA, “Agrokultura” or “the Company”), the producer of agricultural commodities in Russia and Ukraine, reports its livestock update for Q3 2014.

During the twelve months ending September 2014, the average milk production per milking cow increased by 8 per cent to 559 litres per cow per month compared to the twelve months to September 2013. This growth rate has increased from the 4 per cent growth reported in Q2. Despite this increase, overall production has fallen by 2.2 per cent to 974,000 litres a month compared to 2013 owing to the reduction in the size of the herd. This production trend is improving from the 7.7 per cent loss at the end of Q2.

Despite the slight fall in milk production, revenue in SEK for the twelve month period to September 2014 increased by 16.6 per cent on the same period in 2013. This was due to 33 per cent higher rouble milk prices which, when reported in SEK, is partially offset by the recent devaluation in the Russian rouble. Average ex VAT prices for the period were 4.0 SEK per litre (USD 0.61) which is a SEK price increase of 22 per cent. The livestock business is principally a domestic business in terms of cost inputs, sales and financing.

Meat revenues in SEK have fallen 33 per cent incorporating an approximate 10 per cent fall in local meat prices. The drop in meat revenues is for the most part related to the restructuring of the herd which took place in 2012 which temporarily inflated the meat contribution to livestock revenues as old unprofitable stock was slaughtered. The Company is looking at ways to improve the efficiency of the meat sales and targets meat revenues to form approximately 20 per cent of total livestock revenues compared to the current 10 per cent. 

At 30 September 2014, the Company’s Russian livestock herd amounted to approximately 5,000 animals, consisting of 1,750 milking cows, 700 dry cows, 2,100 heifers and 450 bulls, calves, and meat animals. 

Stephen Pickup, Managing Director, comments:

“The pricing environment remains strong with prices in local currency up 33 per cent compared to the previous year. Sanctions are likely to maintain the current pricing environment and increase meat pricing which will likely increase the number of animals being sent for slaughter. Good work continues on productivity per cow driven primarily by changes in feed regime. We look forward to reporting further improvements in coming periods.”

Stockholm on 29 October 2014

For additional information, please contact:

Investor Relations, tel. +44 203 427 3983

About Agrokultura AB (publ)

Agrokultura invests in farmland and produces agricultural commodities in Russia and Ukraine. The Group aims to generate an attractive return on invested capital by optimally utilizing its agricultural land bank through crop production, livestock and related operations. Shares in Agrokultura are listed in Sweden on the Nasdaq OMX First North exchange under the ticker AGRA and the Group’s Certified Adviser is Remium Nordic AB.