• Group reports revenue of S$6.9 million for HY2020, driven by the sale of crop production, livestock and milk
• Gross profit rose 38.3% yoy to S$7.2 million for HY2020, due mainly to a S$2.2 million increase in gain from change in fair value of biological assets and agricultural products as a result of the increase in agricultural produce prices
• Plans to raise overall storage capacity from 65,000 tonnes to 95,000 tonnes is underway; construction of new facility is on track for completion in October 2020
Singapore, 18 August 2020 – Don Agro International Limited (the “Company” or “Don Agro”) and its subsidiaries (collectively the “Group”), one of the largest agricultural companies based in the Rostov region of Russia, has announced its financial results for the half year (“HY2020”) ended 30 June 2020.
The Group posted a 40.6% year-on-year (“yoy”) decline in revenue to S$6.9 million for HY2020, mainly attributable to the shift in terms of sales of sunflowers harvested in 2018 to HY2019.
Despite a slightly lower crop yield for HY2020, the Group has been beneficiaries of higher export prices of wheat than previously projected, due to the expectations of lower global output in 2020. The Group recognised a S$2.2 million or 69.6% yoy increase in gain from change in fair value of biological assets and agricultural produce to S$5.5 million for HY2020. The increase in gain from change in fair value was mainly attributable to an increase in agricultural produce prices, coupled with a slight increase in gain in fair value of livestock due to a rise in milk yield per cow and slightly higher prices of raw milk. As a result, the Group’s gross profit grew 38.3% yoy to S$7.2 million for HY2020.
Overall, the Group reported a net profit of S$4.4 million for HY2020.
Speaking on the Group’s HY2020 financial results, Mr. Evgeny Tugolukov, Executive Chairman said, “Don Agro has been and is expected to continue benefitting from higher export prices of wheat as strong domestic demand and stable consumption of local agricultural produce will ensure that local prices remain well supported. On the other hand, we do not expect significant changes within our livestock segment as it continues to chart steady growth. Moving forward, we will continue to press on with our near-term initiatives, including the expansion of our arable land bank and storage capacity facilities. These initiatives we believe, will drive earnings resiliency and sustainable growth during these unprecedented times amid the Covid-19 pandemic."
As the Group embarks on its next phase of growth following its initial public offering in February 2020, plans to raise overall storage capacity facilities from 65,000 tonnes to 95,000 tonnes are well underway. The Group intends to store larger amounts of wheat and sunflower seeds for longer periods with the intent to sell more during peak pricing periods, thereby resulting in the potential for greater profitability margins. Construction of this additional storage capacity is on track for completion in October 2020.
Additionally, the Group recently invested S$0.4 million to purchase the latest John Deere R4023 SelfPropelled Sprayer which will allow it to boost productivity and optimise efficiency as it scales its business through the expansion of its arable land bank.
Don Agro continues to explore opportunities in mergers and acquisitions, joint ventures and strategic alliances with both domestic and foreign companies. By leveraging on its expertise and experience, the Group intends to seek new and suitable opportunities to expand into other high growth regional markets within Russia, such as other districts within the Rostov region and the Krasnodar region in Russia.