BayWa forecasts "good opportunities" to further boost EBIT in 2016

BayWa forecasts "good opportunities" to further boost EBIT in 2016

Germany-based agribusiness BayWa has booked an 18% EBIT increase boosted by the performance of its majority-owned New Zealand-based T&G fruit export business.

BayWa also forecast "good opportunities" to further boost EBIT year-on-year during the 2016 financial year, owing to what it said will be "an expected recovery in international agricultural trade activities".

EBIT for the first half of 2016 was EUR55.3m (US$61.3m) compared to adjusted EBIT of EUR46.7m for the first half of 2015. Revenue increased to EUR7.5bn in the first-half of 2016 from EUR7.4bn over the same period last year.

Revenue from BayWa's agriculture segment increased 1.3% to EUR5.44bn compared to EUR5.37bn over the same period last year. EBIT in the segment was down by nearly 24% to EUR49.7m against an adjusted EUR65.2m for the first-half of 2015. 

The agriculture segment "fared well, especially in the second quarter", BayWa said. The group said this was mainly due to the successful fruit business in New Zealand of fruit exporter T&G, and the newly-acquired Dutch supplier of tropical fruits TFC Holland.

The agriculture business unit also benefited from the sale of the packaging logistics unit in New Zealand, BayWa said. "In the fruit business, the fruit harvest so far promises good marketing opportunities for apples from New Zealand. Because there is reason to expect improved marketing opportunities in the export of high-quality wheat, for example, a high point in produce trade is anticipated for agricultural trade activities in the second-half of the year, which is typical of the business."

BayWa's agriculture segment was restructured with effect from the start of 2016, with the activities of the group's agricultural trade business unit split into the new BayWa Agri Supply & Trade (BAST) and BayWa Agricultural Sales (BAV) business units. BAST combines BayWa's national and international trade, distribution and logistics activities for grain, oilseed and additional products. The recording business and trade in operating resources and feedstuffs were pooled in BAV. BayWa's fruit, agricultural equipment and digital farming business units were unchanged.

CEO Klaus Josef Lutz said international fruit trading had helped to "more than compensated for the effects of a difficult agricultural market environment... driving the significant improvement in EBIT" over the first half of the year.

Lutz said last year pressure on German fruit producers had intensified, following a bumper crop in 2014, which significantly reduced prices and, he claimed, "threatened the livelihoods of apple growers". This, Lutz said, had coincided with Poland's aggressive export strategy following Russia's restrictions on EU food in the wake of the Ukraine crisis.