Agricover Group Earnings Up 29% In Q1

Aura Dragomir

Agricover Group, a provider of farming products, services and technical and financial consultancy to farmers and the industries processing farming products, concluded the first quarter with 85.28 million RON in turnover, up by 29% year-on-year, amid an increase in the sales of seeds, pesticides, fertilizers and grains.

"In the first quarter, our revenues exceeded the initial plan for 2009 by 5% due to an increase in our business. As stated in the business plan for this year, the operating profit for the first quarter decreased by 54% year-on-year from 9.8 million RON to 4.5 million RON," said Robert Arsene, CEO of Agricover Group.

Agricover Group comprises four integrated companies (Agricover SA, organized in four divisions - Grains, Seeds, Silos and Logistics, Agricover Distribution, Agricover Credit IFN and Agricover - Bulgaria and one not-for-profit organization named the Agricultural Management Centre. The Group has over 700 employees. Last year, Agricover started a programme to modernize seed research & development facilities, which continues in 2009 with the expansion and technical modernization of several farms. Most of the profit will be reinvested in upgrading silos and reception bases. Concurrently, the investment, modernization and expansion plan includes the farms specialized in seed production. Seed production is organized on 9,600 hectares within both proprietary and partner farms.

Last year, the Grains Division of Agricover SA managed a two-fold year-on-year increase in turnover due to an increase in the quantity of purchased and traded grains, after the price of farming products had increased in 2007 and remained high until the Summer of 2008. The price of grains produced in 2008 decreased by 30-40% due to rich crops and a decrease in demand following the global financial turbulence. The Distribution Division posted a 67% increase in turnover following substantially higher sales of seeds, pesticides and fertilizers. In turn, the Silos Division posted a 55% increase in revenue following a more substantial traffic through the Group"s storage facilities.

Also during the first quarter, Agricover Credit IFN, the Group"s lending arm specialized in financing farming operations, posted a turnover in excess of 2 million RON and an operating profit of 1.3 million RON. Agricover Credit IFN was established in March 2008 and has a share capital of 39 million RON. Since the date of establishment, the company has disbursed financing in the aggregated amount of 77.5 million RON. Agricover Group recently opened Agricover - Bulgaria within broader expansion plans at regional level. "As far as the agricultural business is concerned, Bulgaria is very similar to Romania. The logistic position is quite competitive, considering the Danube and the Black Sea, we believe," said Agricover Group CEO Robert Arsene. Agricover - Bulgaria was registered in the last quarter of 2008 and started operations this spring. Job vacancies have been partially filled and sales have been made to roughly 50 local farmers.