Tonkens Agrar's (DE:GTK) c 3,000 hectares of high-quality farmland in the Saxony-Anhalt region of Germany is the starting point for a vertically integrated agricultural production group. It processes the potatoes and onions grown on the farm in-house, substantially adding value to the harvested vegetables. Manure from the dairy herd and residual material from harvesting and processing crops is used to generate electricity, creating an additional revenue stream that is predictable and non-seasonal.
Good start to FY17
Revenue rose by 21% (€1.3m) year-on-year during H117 to €7.8m. Slightly over half of this increase can be attributed to crops from the harvest in H116 being stored for longer than usual and not sold until H216. In contrast, during H117 the harvest was sold significantly before the end of the period. Almost one-third of the sales increase was the result of unusually high potato prices. Profit before tax rose by 70% (€0.3m) to €0.8m and net profit by 85% (€0.3m) to €0.7m. Net debt increased by €0.7m during the period to €17.6m, resulting in high gearing (net debt/equity) of 165% at the period end.
More to come in H2
Noting initial successes in winning additional customers for the vegetable processing business and an improvement in farmgate milk prices, management expects the group to achieve a significantly improved profit in FY17 after two years of weak prices leading to losses before tax. Management also expects a further increase in revenues during FY17, with the rate of growth higher than the 5% achieved in FY16. Harvesting crops, vegetable processing and milk production are all expected to contribute to this growth.
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