WOOD Flash – AUGA Group: weak 3Q23, 2024E EBITDA guidance in line with our estimate
AUGA’s results were worse than expected, due to a revaluation loss on the biological assets and low organic crop prices. On 7 August 2023, the group announced that one-third of its land will be cultivated using regenerative conventional farming (less volatility in commodity prices compared to organic farming). Next season, 40% less land than this year will go to summer organic crops, which are sensitive to the climate. This should ensure that, by 2024E, half of the group's income will come from the sale of conventional products, and price changes will have a smaller impact on the variability of the results. AUGA also announced its EBITDA guidance for 2024E. The group expects an EBITDA of EUR 23.3m, in line with our estimate of EUR 24.7m. Additional financing is needed and there is a possibility of an equity increase at the group level or for AUGA Tech in 2024E, but the decision has not been announced yet.Auga Group AB. Auga Group AB, formerly Agrowill Group AB, is a Lithuania-based company engaged in the agriculture sector. The Company's activities are structured mainly into three divisions, namely Mushroom-growing, Plant production and Livestock production. The Company offers white, brown, portabella, eryngii, pleurotus and shiitake mushrooms. It specializes in organic wheat and other crops, including organic vegetables and organic feed for livestock in its farms. The Company supplies potatoes, beetroots, onions, carrots, marinated champignons, marinated beetroots, among others. The Company operates own trademark AUGA. In addition, the Company is involved in own farms management. The Company has numerous subsidiaries, including UAB Arginta Engineering, UAB AVG Investment and UAB Agro GIS, among others. It operates domestically on the Lithuania territory.
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