AB East West Agro 2021 1st half-year reportKaunas, 2021-08-16 08:20 CEST --
AB East West Agro presents an interim set of unaudited financial statements for the first half of 2021 with the approval of the responsible persons.
In the first half of this year, EWA's sales revenue amounted to EUR 16.88 million (EUR 10.10 million in the first half of 2020). The company's profit before taxes was EUR 0.94 million (EUR 0.056 million in the first half of 2020), EBITDA for trailing twelve months reached EUR 3.36 million (EUR 1.35 million in 2020.06.30)
Review of the first half of 2021
The favorable natural conditions in 2020 led to a significant jump in the quantity and quality of the harvest. The rapeseed and wheat harvest yield was one of the highest in the country’s history. Average purchase prices have been high throughout the year and still maintain the upward trend. The good harvest of 2020 and the improved financial indicators of farms are also directly felt in the machinery market - farmers are more confident in making decisions to renew the farm machinery fleet, which has not received the required amount of investment in the last few years.
Higher output prices (and therefore more profitable farm operations) and delayed investments are creating higher demand worldwide, but at the same time the global supply chain for raw materials and components disrupted by the pandemic poses significant challenges for machinery manufacturers. As a result, company is facing a significant delay in the delivery of ordered goods, there is a restriction on the supply of equipment, which is unlikely to allow us to use the full sales potential in 2021. In an effort not to lose customers, company is already concluding contracts for machinery for the 2022 season.
Agricultural machinery market
In the first half of this year, 393 new tractors were registered in Lithuania, which is 47% more than last year (268 units). The market share of EWA tractors increased to 16.5% during this period, resulting in 59% more new Massey Ferguson tractors registered (65 units) than in 2020 (41 units).
The 100th annually sold MF tractor left our yard earlier this year - on 20th of July. While the 100th tractor sold in 2019 was by the end of December, and in early November in 2020. This is also the 6th year in a row, or every year that we have represented Massey Ferguson tractors, that we have passed this milestone of 100 tractors sold.
In 6 months of 2021, farm operators had registered 77% more combine harvesters (62 units) than in 2020 during the same period (35 units). With the significant increase in the market, the number of Massey Ferguson combine harvesters registered was as much as 66% higher (15 units) than in 2020 (9 units).
At the beginning of July, after a 2-year break, EWA invited its customers back to a "live" machinery launch event "MF eXperience", organized in partnership with Massey Ferguson. During this event, the full range of MF machinery was demonstrated to farmers and the new tractor models 8S and 5S, as well as the MF TH telescopic handlers were presented.
Outlook for 2021
The company's management maintains its budget for 2021 unchanged, with expected sales revenues of EUR 31.5 million. Profit before tax is expected to reach EUR 1.78 million and EBITDA will reach EUR 2.5 million.
In order to implement the 2020 March 16 option agreements and to maintain liquidity on the stock exchange, it is planned to continue repurchasing own shares through the official offering market of the AB Nasdaq Vilnius Stock Exchange. The company has established a reserve for the acquisition of its own shares, the purchase price and quantity of shares are determined by the Board.
On 16.07.2021, 800 units and on 06.08.2021, the remaining 700 units of the private placement bonds, issued on 2020.12.04 with maturity date 04.12.2022, were redeemed early. Each bond has a nominal value of EUR 1000. The company has no more issued bonds outstanding.
When preparing the draft annual profit distribution for the shareholders' meeting, the Board of the Company will strive to allocate at least 25% of the annual net profit to dividends, if the business environment and accounts payable allow it. In a favorable situation, a higher share of net annual profit is expected to be allocated to dividends in the future.
The main objectives in 2021 will be to further increase the sales of higher profitability products and services, and to strengthen the position in the markets of tractors and combine harvesters. Opportunities for geographical development in the region are also being explored in cooperation with key suppliers. CFO
Danas Šidlauskas
danas@ewa.lt
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