TKS Union AG
TKS Union AG: Russian investment Sojuz performing very well
TKS Union AG / Key word(s): Half Year Results/Forecast TKS Union AG: Russian investment Sojuz performing very well
Hamburg, 24 October 2014. At the end of the 2014 agricultural season, TKS Union AG reports a very positive performance of the Russian Sojuz Group. Since 2013, TKS Union has held a share of roughly 35 percent in the Russian agricultural corporation. Starting in 2007, Sojuz has built up an integrated business model ranging from the cultivation of grain to the production of fodder to the breeding and marketing of pigs for the undersupplied Russian market. The Group operates at two locations (Belgorod and Voronezh) in the fertile Chernozem region some 60 kilometres south of Moscow. Sojuz focuses on the production of high-quality meat to international standards and has become one of the top ten Russian meat producers in only a few years’ time. The production figures reach Western European standards and show a continued positive trend. “We are very pleased that Sojuz has even surpassed our expectations,” said Benedikt Förtig, member of the Management Board of TKS Union AG. “As a Russian producer, Sojuz makes an important contribution to the country’s food supply and has not been adversely affected by the sanctions.” Only two years after making the investment Sojuz is already a major success for TKS Union. While large quantities of grain (winter wheat 4.4 t/ha, winter triticale 3.9 t/ha) and sunflowers (2.5 t/ha) have already been harvested, the maize harvest will end shortly. The company is testing a new system for wet maize silaging, which will lead to a further reduction in production costs and improved fodder quality. Sojuz’ total harvest has reached a record level and is about 15 percent higher than the good harvest of the previous year. The company has thus secured its fodder supply for next year and will not need to source fodder from external suppliers. To further diversify the crop rotation for the coming season, winter rapeseed has been sown on over 3,000 hectares for the first time. Within the framework of its integrated business model, Sojuz internally processes the harvest into fodder. For this purpose, a state-of-the-art mixed fodder factory was taken into operation in the second quarter of 2014. It has a production capacity of 250,000 tons per year and is meanwhile operating at full capacity. The homogeneous quantities of high-quality fodder will ensure consistently high meat quality. Performance above plan; investments to be financed from cash flow Says Benedikt Förtig: “An undersupplied market, the best farmland and state-of-the-art technology and production techniques make Sojuz a very exciting company. The Group benefits very much from the exchange of know-how between its Russian and western employees.” Due to the very positive overall environment, the company’s operating performance has exceeded the original plans. Sojuz is likely to generate a record result in 2014. A total output of approx. RUB 3.6 billion (EUR 88.9 million) means that the company has almost reached the level of the full year 2013 in the first six months of 2014. Moreover, the business is highly profitable. The future growth will therefore be financed from the cash flow. In 2015, the company plans to start building its own meat factory to further extend the value chain. This will lead to a further improvement in margins. Moreover, the company’s modern barns are to be expanded to accommodate 1.5 million pigs (currently 800,000) by the year 2017. To secure the supply of quality fodder, the Group also plans to expand the land under cultivation by 20 percent from 50,000 hectares to 60,000 hectares during the same period. The aim is to generate sales revenues of approx. EUR 300 million and to post a clearly double-digit EBIT margin in 2017. Contact 24.10.2014 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de |
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