Lantmännen increases profit and proposes a historically high dividend

Lantmännen’s income after net financial items, adjusted for items affecting comparability, for 2014 was MSEK 740 (683). The Board of Directors proposes a historically high dividend of MSEK 463.

Lantmännen’s income after net financial items, adjusted for items affecting comparability, for 2014 was MSEK 740, an improvement of MSEK 57. The higher income was mainly due to profitability improvements in the Food and Energy Sectors.

Before items affecting comparability, income after financial items was MSEK 1,342 (85). The items during 2014 include mainly capital gains and positive revaluation effects in connection with Scandi Standard’s IPO, the sale of German and Polish operations, as well as restructuring costs in the Agriculture and Food Sectors. Items affecting comparability during 2013 were mainly related to the write-down of the ethanol plant in Norrköping, Sweden.

“Lantmännen continued to develop positively in 2014, with all Sectors showing positive results. Many of our businesses have taken further steps to improve their operations, and the work on Lantmännen’s long-term, growth-oriented strategy – Strategy 2020 – has begun to show results in several areas,” says Per Olof Nyman, Lantmännen’s Group President and CEO.

Cash flow for the year, before financing activities, was MSEK 2,077 (2,450) and the Group’s net debt was reduced by SEK 1.3 billion during 2014 and currently stands at approximately SEK 3.7 billion. This resulted in a stronger equity ratio, which ended the year at 43.8 percent (42.5). Investments amounted to MSEK 1,087 (1,043) for the full year.

”Lantmännen has further strengthened its already strong financial position, and is well-positioned for further growth,” says Per Olof Nyman.

In January 2015 it was announced that the boards of Lantmännen and Kalmar Lantmän have proposed a merger between the two associations. A combined Lantmännen and Kalmar Lantmän – if the merger is approved – will result in an even more competitive company with roots and ownership among Swedish farmers. The merger proposal is subject to approval by Kalmar Lantmän’s general meeting and will be addressed at Lantmännen’s annual general meeting. The merger is subject to approval by the Swedish Competition Authority.

The Sectors' full-year results
All figures below refer to the full year 2014, and are adjusted for items affecting comparability.

Operating income for the Agriculture Sector is MSEK 56 (105). The lower result is largely due to lower spring seed sales and an intensifying competitive situation on the Swedish market as well as a slightly lower result within the Sector’s international interests. In the latter part of the year the development within the Sector has been positive and income has improved.

Operating income for the Machinery sector is MSEK 181 (255) and is affected by significant reorganization costs, primarily in Lantmännen Maskin Sweden. The agricultural machinery and construction machinery markets have been weak during the year; for construction machinery this is mainly a result of decreased activity in the mining sector and delayed political decisions in a number of major infrastructure projects. Lantmännen Maskin Sweden has increased its market shares despite a declining market.

The Energy Sector has increased its operating income to MSEK 72 (-46). The improvements are due to increased sales in Lantmännen Aspen and efficiency improvements and increased sales in Lantmännen Reppe. Further cost reductions and successful approaches to alternative raw materials and new customer offerings in combination with lower grain prices during the fall have had a positive impact on earnings for Lantmännen Agroetanol. The business still faces challenges in terms of very low ethanol prices and a lack of political clarity regarding long-term energy and climate policies.

The Food Sector has increased its operating income to MSEK 521 (503). Several major corporate transactions were completed during the year, all in line with Strategy 2020. Lantmännen Cerealia has continued efforts focusing on new grain concepts that are attractive to both customers and growers and has launched a number of successful new products. Lantmännen Unibake has shown positive growth during the year, with sales continuing to increase - particularly in the UK, the Benelux area, Finland and the United States.

In January 2015, it was announced that Lantmännen has signed an agreement with Lion Capital to acquire the Finnish company Vaasan Group Oy, which has operations in bake-off, crispbread and fresh bread. The acquisition is subject to customary approval by competition authorities.

Lantmännen Real Estate continues to develop positively and operating income is MSEK 157 (149).

Historically high dividend
The Board has decided to pay a dividend of a 1.5 percent (1.5) refund on members’ purchases from Lantmännen Lantbruk Sweden and 0.5 percent (0.5) on purchases from the Machinery Sector’s Swedish operations. The Board has also decided on a final price adjustment of 1.5 percent (1.5) for delivered grain, oilseed and grass seed. The total estimated refund and final price adjustment amounts to MSEK 135 (129).

The Board proposes that the annual general meeting decides on a contribution dividend of 9 percent (9), amounting to MSEK 178 (171), and a contribution issue of MSEK 150 (0). In total, the proposed contribution dividend and contribution issue amount to 17 percent (9) of the association’s total, paid-in and issued contribution-based capital. The Board proposes a dividend on subordinated debentures of 9 percent (3), totaling MSEK 5 (2).

“Lantmännen’s strong financial position and several successful transactions have provided the foundation for the historically high dividend proposal. Thus, Lantmännen actively contributes to creating thriving Swedish farming,” says Bengt-Olov Gunnarson, Lantmännen’s Chairman of the Board.

“We have now taken a number of important first steps when it comes to executing Strategy 2020. With agribusiness at the center we will continue to develop and profitably grow Lantmännen within the grain value chain in our home region. The planned acquisition of Vaasan and the proposed merger with Kalmar Lantmän are strongly linked to our mission to increase the profitability on our members’ farms and optimize the return on their capital,” says Per Olof Nyman.

The year-end report in its entirety is available at www.lantmannen.se/finance.