Holde Agri Invest SA, a Romanian agricultural company operating farmland, reports consolidated turnover of 26 million lei and a net profit of 1.5 million lei in the first nine months of 2020. For full year 2020, the management estimates consolidated turnover to between 40-45 million lei and operating profit between 4-6 million lei.
“2020 was a year full of challenges arising in the context of a global pandemic that, in our case, collided with a particularly severe drought that compromised the crops across Central and Eastern Europe, including Romania. Despite this difficult context, Holde’s results for the agricultural year 2019/2020 are better than we expected following the onset of the drought and in line with the budget established for the financial year 2020, proving that investment in modern agriculture can be profitable even in a challenging year”, said Iulian Circiumaru, President of the Board at Holde Agri Invest.
In the first nine months of 2020 Holde registered consolidated revenues from the main activity of 26.2 million lei, out of which 19.1 million lei from the sale of agricultural products, 5.7 million lei from subsidies and compensations, and 0.95 million lei from equipment redundancies.
During the 2019/2020 agricultural year, Holde generated total harvests of 24,003 tons, out of which 3,400 tons of organic sunflower, wheat, corn, peas, and the rest of conventional crops such as rapeseed, wheat, corn, sunflower, peas, soybeans. As of September 30th, 2020, revenues related to sales through spot and forward contracts were registered for 74% of the harvest of the agricultural year 2019/2020 while the rest of the crops being stored in the company’s silos.
“On top of challenges related to drought and COVID-19 pandemic, in 2020, our team managed to continue the process of land expansion and integrated four new farms into Holde’s operations. Typically, this type of M&A activities, carried out at such a large scale, especially in the agri-sector, take time and are not expected to be profitable on a short-term since they require a complete restructuring of the business model. In our case, acquisition of every single farm requires intervention from the central office and includes, amongst others: reorganization of people, machinery, work contracts, investments at it is a massive operational challenge. The fact that we not only successfully integrated new farms, but also managed to generate profit midst draught and the global pandemic was the result of right decisions taken by the management”, said Liviu Zagan, CEO of Holde Agri Invest.
The nine-month results were obtained following the exploitation of a total area of 7.827 hectares, spread over our farms based in three locations: Rosiori, Frumusani, and Videle. Compared to the agricultural year 2018-2019, the like-for-like comparison indicates that the yields obtained increased by 68%. The net result of 1.5 million lei (191 lei/ha), is above the forecasts from the 2020 budget and represents a significant improvement compared to the loss of 4.50 million lei recorded for the full year 2019.
In the first nine months of 2020, Holde carried out an investment program of 43.9 million lei, capital that was raised during two subsequent private investments totalling 22 million lei carried out in December 2019 and respectively June 2020, supplemented with bank loans and financial leasing contracts. Holde’s shares floated on the AeRO market of the Bucharest Stock Exchange on October 1st, 2020. Since the debut, investors traded HAI shares in the total value of 5 million lei, approximately 10% of the total market capitalization of the business.
Holde is currently in the process of negotiating the acquisition of new farms, ranging in size from 400ha up to 6,000ha. All the farms that are in Holde’s pipeline are “bolt-on” acquisitions, meaning farms located within 200km radius from Bucharest that will complement the current business structure. The management intends to finance these new transactions using the same structure as it was in the case of previous acquisitions, namely with a mix of equity and debt. Consequently, Holde will carry out in 2021 a share capital increase operation to access fresh capital that will help the Group grow further by acquiring new farms.