Profits rise 19% to €3.1m at cereal grower based in Poland and Ukraine

Continental Farmers Group , quarter-owned by Irish agri-food business Origin, has reported profits of €3.1m to the end of last year, a 19% increase on 2010.

The Eastern European cereal grower raised €14.7m from new investors via a public listing in Dublin and London in June. Also in 2011, the group completed a joint venture with ED&F Man for the long-term supply of sugar beet in southern Ukraine.

Group chief executive Mark Laird said: “2011 was a year of transformational development for Continental Farmers Group. The successful public listing and capital raise underlines our strategic priority to become a leading and large sale precision farming enterprise.

“We are on track to have over 24,000 hectares under crop in western Ukraine in 2012 and continue to focus on the management of climatic, cropping and pricing risk. We believe the group is well-positioned to respond to new opportunities as they arise.”

A grower of oil seed rape, potatoes, wheat, sugar beet and maize, the group has increased its turnover its main bases in Ukraine and Poland. It has been operating in Ukraine since 2006, and in Poland since 1994.

The group increased its area under harvest in Ukraine by 23% up to 15,927 hectares last year. Overall, it increased its total harvest area by 20% to 18,369 hectares in 2011.

The group’s harvested area remained steady at 2,442 hectares in Poland, where it owns 1,600ha and leases a further 1,100ha.

Group revenues increased by 19% to €25m. EBITDA was 5% higher at €6.7m. The group delivered diluted earnings per share of 2.47c (3.23c in 2010) after a new ordinary share issue.

Group financial officer Alastair Stewart added: “Through the public listing we ended up with blue chip investors like Blackrock, Artemis, Zurich and KBI. The completion of the joint venture agreement with ED&F Man for the supply of sugar beet in the Mykolaiv region of southern Ukraine establishes an important future growth platform along with providing important regional and crop diversity to our existing operations.

“That agreement with ED&F Man could be used as a template for future expansion, but we have no immediate plans of that kind in the pipeline. We are seeing a lot of press about dry conditions in eastern Ukraine and Russia, but our region in southern Ukraine gets about 90cm-100cm of rain per year, so we can grow without irrigation and our crops are looking very good.”

The group began farming operations in Ukraine in 2006 and since then has leased approximately 25,000 hectares of chernozem (black soil) farmland by way of land lease in the Lviv region in western Ukraine.

The availability of farmland at low cost and world class soil composition, climate and topography of Ukraine make it a desirable location for commercial farming.

Gross profit in the Polish operations increased significantly to €1.5m on a 13% increase in turnover to €4.5m. Profit from Polish operations increased by €0.9m to €1.4m.

A 20% increase in Ukraine turnover to €20.5m saw a 9% decrease in gross profit to €7.6m, while Ukraine EBIT declined to €3.4m from €4.3m. This was not as a result of cost increases or inefficiency, but was driven by the significant swing in the crop profitability mix.

The group is listed on the London Stock Exchange’s AIM market, and the ESM market of the Irish Stock Exchange.