AUGA group, AB interim financial results for the 6-month period ended 30 June 2023

In the first half of 2023, the sales revenue of AUGA group, AB and its subsidiaries (hereinafter – the Group) amounted to EUR 40.93 million and grew by 20% compared to the same period of 2022. This result was due to the higher 2022 harvest, part of which was sold during the first half of 2023, and to the increased sales of mushrooms and end-consumer products.

In 2023, the declining prices of the main agricultural products (grain and milk) had a negative impact on the financial results. The Group's gross profit for the first half of 2023 amounted to EUR 3.07 million, compared to a gross profit of EUR 12.43 million in the same period last year. In the reporting period, the Group's EBITDA was EUR 3.57 million, compared to EUR 15.05 million last year.

"While the declining prices of organic production have had an impact on the financial results, the Group has been implementing the major operational changes foreseen in its strategy for some time now, which will increase the resilience of the business to external factors. We are implementing a new business model based on the development of agricultural technologies and the scaling of the sustainable farming standard. In order to make sustainable technologies and the AUGA farming standard accessible to both organic and conventional farmers, we have converted part of our organic land to regenerative conventional farming. In this way, we are diversifying our activities, opening up wider markets, increasing efficiency and reducing the impact of external uncertainties. This will allow for an improvement in financial results," said Kęstutis Juščius, CEO of AUGA group, AB.

Crop growing segment

In the first half of 2023, total revenue of the segment amounted to EUR 13.74 million, compared to EUR 8.85 million in the previous year. Sales revenues were increased by higher harvest of the 2022 sold this year. However, in 2023, decreasing prices of organic products did not allow to achieve better results. Gross profit, which includes the result of the sale of agricultural production, changes in the fair value of biological assets and agricultural subsidies, amounted to EUR 1.25 million at the end of the first half of 2023. In the same period of 2022, it was EUR 11.29 million.

According to the group's data, the harvest for the year 2023 will be average. However, the final season results can only be evaluated after the third quarter.

Dairy segment

The 12% decrease in milk purchase prices during the first half of 2023, compared to the same period last year, had a significant impact on the segment's results. Dairy sales revenues in the first half of 2023 were EUR 7.77 million compared to EUR 8.14 million in the same period of 2022.

The segment's gross loss in the first half of 2023 was EUR 0.14 million, compared to a gross profit of EUR 1.29 million in the same period last year.

Mushroom growing segment

Stable production volumes, more efficiently managed processes, and higher selling prices in the first half of 2023 increased the segment's sales revenue to EUR 15.28 million (compared to EUR 14.28 million in the same period of 2022) and the segment's gross profit to EUR 1.00 million, compared to a gross loss of EUR 0.33 million in the same period last year.

Fast-moving consumer goods (FMCG) segment

In the first half of 2023, segment sales increased by 52% and amounted to EUR 4.14 million, compared to EUR 2.72 million in the same period last year. The gross profit of the FMCG segment amounted to EUR 0.98 million in the first half of 2023 (in the same period of 2022 – EUR 0.19 million). 

In May 2023, the Group launched a new line of more sustainable organic products. It consists of milk, kefir, curd, sour cream, butter, oat flakes and eggs. The new products are made exclusively from raw materials grown on AUGA organic farms. The products are sold in major Lithuanian supermarket chains.

Operating costs

The Group's operating costs in the first half of 2023 were EUR 7.37 million, compared to EUR 5.78 million in the same period last year. Operating costs were increased by employees' salaries, marketing expenses, investments related to the introduction of the new end-consumer products into the market.

Implementation of the strategy

In the second quarter of 2023, 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.

Since the start of the season, AUGA M1 tractors from the first production batch are being tested in real work. The Group is also further developing and testing specialised feed technology. The Group is focusing on biomethane production projects – infrastructure is installed, the connection of biogas to the natural gas network is being carried out.

In August, the Group also announced the scaling of the sustainable farming standard not only on organic farms, but also on conventional farms, converting a part of arable lands into regenerative conventional agriculture. The Group will aim to scale the technology and the sustainable farming standard by inviting all farmers to join the sustainable farming community, not only those engaged in organic farming today.

As reported on 21 July 2023, the Group sold 100% of the shares of Kooperatinė bendrovė "Grybai LT" to Akcinė bendrovė "Kauno grūdai“. For the transaction, the Group received an amount of EUR 16,327,365.26, including EUR 12,948,612.14 for the Company's shares and EUR 3,378,753.12 in repayment of a loan previously owed to Baltic Champs UAB. The profit from this transaction will be reflected in the results of the third quarter of 2023. With the sale of this part of the business, the Group will focus on the scaling of the new, more sustainable organic products in a much larger food category than before.

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:

CEO of AUGA Group, AB

Kęstutis Juščius

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