Improved farmgate milk prices and higher volume sales of processed vegetables enabled Tonkens Agrar AG (DE:GTK) to achieve its stated goal of reporting a net profit after tax for FY17/18, compared with a loss the previous year. However, persistently low potato prices prevented the group from meeting its expectations of year-on-year revenue growth. Management continued with its strategy of focusing on higher-margin, added-value business, with volumes of peeled and packaged produce rising by 23% year-on-year.
Low arable yields depress FY17/18 revenues
Group revenues reduced by 6% year-on-year during FY17/18 to €14.5m. A modest improvement in revenues from milk production related to improved farmgate milk prices and higher volume sales of processed potatoes and onion was more than offset by low yields of cereal crops and oil-seed rape, resulting from unfavourable weather conditions during the calendar 2017 harvest. The cost of materials as a percentage of revenues increased by 2.3pp to 49.2%. Personnel costs were unchanged. The group moved from a €0.9m loss before tax to a €0.8m profit. This was partly the result of higher potato stocks at the year-end, partly a €0.9m uplift in other income, which benefited from the sale and leaseback of property and reversal of provisions. Net debt reduced from €17.7m at end-June 2017 to €16.6m, cutting gearing from 193% to 171%.
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