On the impact of coronavirus on performance of AB Linas Agro Group
Comment of AB Linas Agro Group on the activities and business environment in the context of coronavirus pandemic:
Currently, all of the Group companies are active, but a significant number of office workers and salesmen work remotely, while agricultural machinery service personnel work avoiding direct contact with the customer.
Whilst impact on trade in grain oilseeds and feedstuff is currently negligible, this area might be negatively affected by the pandemic because road transportation is burdened.
Subsidiaries providing goods and services to farmers have certain restrictions due to the pandemic situation: agricultural exhibitions have been canceled in Lithuania and Estonia, companies in Latvia have had to cancel sales promotion events and field days for farmers. As a result, sales will be difficult to predict, but sales of machinery should be affected, as farmers are used to making machinery purchases at exhibitions where they can directly see the machinery and equipment on offer. Also seeds sales are being disturbed on the very high season as retail stores are closed.
The performance of agricultural companies is not affected by the pandemic, but the stagnant export of Lithuanian dairy products to Italy may indirectly influence the demand and price of milk produced by companies.
Poultry business may face difficulties due to declining demand in the HORECA sector.
Although the liquidity and turnover of the Group's products are high in the short term, we estimate that a prolonged pandemic and quarantine could lead to a stalling of customer payments, which would adversely affect the Group's working capital.
Until the pandemic spread is completely uncertain and there is a likelihood that the quarantine in Lithuania will be prolonged, the management of the Group cannot assess the exact impact of coronavirus on the Group's operations and results in FY 2019/2020. However, we estimate that the coronavirus pandemic could adversely affect the Group's operations in the second half of this financial year.
Managing Director of AB Linas Agro Group