AUGA group, AB interim financial results for the 3-month period ended 31 March 2023

In the first quarter of 2023, the sales revenue of AUGA group, AB and its subsidiaries (hereinafter – the Group) increased by 24% to EUR 21.70 million due to the stable production activity and the increase in production prices in 2022, compared to EUR 17.56 million in the same period last year.

Due to uncertainty in the crop growing and dairy segments caused by volatile production prices, the Group significantly lowered its forecast prices for the 2023 harvest, resulting a lower result for the first quarter, compared to the previous year. The gross profit of EUR 2.45 million compares to a profit of EUR 5.65 million for the same period last year. The Group's EBITDA decreased by 58% to EUR 2.79 million compared to EUR 6.71 million in the first quarter of previous year.

"Agricultural activity is constantly changing and depends on many factors. This precisely is why we need technologies that can manage some of the fluctuations in activity and deliver more sustainable and efficient work and better harvest. The technologies we are developing will help solve this", said Kestutis Jušcius, the CEO of AUGA group, AB.

Crop growing segment

There are many uncertainties in the crop growing segment, with output prices down from last year's level. The real price level, though, will become clear at the end of the season, after the harvest. Some of the seasonal work (mainly in the autumn of 2022) has been done in a high-cost environment, although there have been recent positive trends for significant costs, such as for fuel, which has been declining in price. The Group will be able to assess the final results of the season after the third quarter.

Taking a conservative view of the situation, the Group reduced its forecast harvest prices, resulting in only a EUR 0.13 million change in the fair value of biological assets in the first quarter of 2023 (last year it was EUR 3.53 million). Gross profit, which includes revenue from the sale of agricultural production, changes in the fair value of biological assets and agricultural subsidies, amounted to EUR 1.52 million in the first quarter of 2023. In the same period of 2022, it was EUR 4.94 million.

Dairy segment

After the drop in milk yield in the middle of 2022, it returned to its previous level. Sales revenue in the dairy segment amounted to EUR 4.15 million in the first quarter of 2023 compared to EUR 4.05 million in the same period of 2022.

The segment's gross loss for the first quarter this year was EUR 0.07 million, compared to EUR 0.57 million gross profit for the same period last year. Falling raw milk prices worsened the overall performance, but the situation has now stabilised.

Mushroom growing segment

The last few years have been particularly challenging for the mushroom growing segment due to the consequences of COVID-19, production disruptions and increased energy prices, but in the first quarter of 2023 the results are significantly better than last year. The segment's improved overall performance was driven by stable production volumes, cost control and favourable product prices.

Sales revenue for the segment amounted to EUR 7.70 million, an increase of 10% from the same period last year. The gross profit for mushroom growing in first three months of the year was EUR 0.58 million, compared to a loss of EUR 0.13 million in the same period last year.

Fast-moving consumer goods (FMCG) segment

The FMCG segment continues to show consistent growth – sales in this segment in the first quarter of 2023 amounted to EUR 1.94 million, an increase of 38% compared to the same period last year. The segment's gross profit in the first quarter of 2023 amounted to EUR 0.41 million, compared to EUR 0.27 million in the same period last year.

In May 2023, the Group launched a new line of more sustainable organic products. It consists of basic, everyday products: milk, kefir, cottage cheese, sour cream, oat flakes and eggs. The products are sold in major Lithuanian supermarket chains. For these products, the Group will target a 10% market share in the relevant categories.

Operating costs

The Group's operating costs for the first quarter of 2023 amounted to EUR 3.45 million, compared to EUR 2.94 million in the same period last year.

Implementation of the strategy

On 25 May, the Group presented a new business model to the public and investors. The model is based on three main pillars: the development and production of sustainable farming technologies, the organisation of agricultural activities through cooperatives applying the AUGA sustainable farming standard, and supplying consumers with more sustainable food products. The Group considers that this will help to achieve the goals set out in its strategy more effectively.

The new business model will first be tested and refined among the Group's farms. Assuming the new model proves effective, there are plans to allow other farms to join in the second half of 2023.

Financial data in MS Excel format

To facilitate investors' access to and analysis of the Group's financial data, the Group has prepared and makes publicly available on its website historical financial data, including data for the most recent reporting period, in MS Excel format. The data can be accessed at the following link: https://auga.lt/en/investors/reports-and-presentations1/quarterly-and-annual-reports/

Contacts:
Mindaugas Ambrasas, CFO, AUGA group, AB
Mob. +370 620 67296
E-mail: m.ambrasas@auga.lt

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• FS 2023 1q