Annual General Meeting 2019
The AGRAVIS Raiffeisen AG Annual General Meeting took place at group company AGRAVIS Niedersachsen-Süd GmbH in Wunstorf on 9 May.
Shareholders are fully briefed about the preceding financial year at the Annual General Meeting. It is also a decision-making body and elects members of the Supervisory Board and Advisory Board.
The AGRAVIS Raiffeisen AG Annual General Meeting took place at group company AGRAVIS Niedersachsen-Süd GmbH in Wunstorf on 9 May.
After a financial year 2018, AGRAVIS wishes to stabilise its turnover and operating profit in 2019 to return to growth mode from 2020. The Chairman of the AGRAVIS Board of Directors Dr Dirk Köckler looked to the future at the agricultural trade and service company’s Annual General Meeting: The company boss established clear goals in front of around 850 shareholders and guests in Wunstorf-Kolenfeld, Lower Saxony: The first requirement he mentioned was the strengthening of the cooperative association and expanding business with all associates. He also made it clear that: “AGRAVIS must earn money in the shape of retained earnings. AGRAVIS must be capable of paying dividends to its shareholders. AGRAVIS must be an attractive employer for its employees. AGRAVIS must become or remain the market leader in the relevant core areas to achieve these goals.”
Cooperatives on equal footing
He is convinced that the AGRAVIS Group will visibly achieve these goals together with the cooperatives on an equal footing. “To do so, proper, targeted investments must be made and structural change and the market must be regarded as an opportunity, not a risk.” The marked structural change offers the cooperative association the chance to gain freed market shares thanks to lean processes, innovation and market access. Extra service due to the use of new technologies and data management offers further opportunities for adding value. “This new intensity is essential to evolve with regard to our cooperative owners and thus further develop business models which customers will ask and pay for.” AGRAVIS is ultimately required to be a top performer in all fields. If AGRAVIS does the best possible job, cooperative shareholders, suppliers and customers in industry will find it easy to do business with AGRAVIS. As a manager in the capacity of Chairman of the AGRAVIS Board of Directors, he has been referring to this “passion for business” since mid-March 2019 as part of the way he understands market leadership.
Concentrating on our brand essence
Thanks to the completed Hanse strategy project, AGRAVIS has already set a streamlined course towards a more operational direction on an organisational level. “AGRAVIS concerns itself with what customers need and for which they are now also prepared to pay a market price. AGRAVIS must do what AGRAVIS is capable of and for which it can deliver a sustainable, commercial business model,” he affirmed, calling for a focus on the brand essence. As examples of implementing the group strategy, Dr Köckler referred to the construction of a liquid fertiliser plant in Schwedt as a joint venture with the Verbio Group, the founding of Regio Baustoffe GmbH & Co. KG, the highly effective new set-up in the special feed business and the introduction of a standardised ERP system environment providing streamlined processes. The company is also winning the race in the Plants, Animals and Machinery business units to handle the processes that customers and the market require efficiently, more reliably and more effectively than others. “This is where AGRAVIS delivers as an affiliate partner.”
AGRAVIS plans for organic farming and digitisation
Dr Dirk Köckler affirms that focusing our capabilities on customer needs is one key area in AGRAVIS’s current and future tasks. This should be translated into joint business within the cooperative association: “On an equal footing. With professionalism and mutual appreciation.” Turning to operational activities, Dr Köckler outlined the plans that AGRAVIS has for organic farming and digitisation: AGRAVIS plans to enter the organic market with a separate company called biovis in the second half of the year and wishes to package and expand its digital services for customers. He used feedstuff production, one of AGRAVIS’s core expertise, as an example to describe the challenges of the market. “We’re very familiar with the low margins, high technical standards and volatile markets in this business.” AGRAVIS is ready for its forthcoming structural change through cooperation models with cooperatives and a growth strategy outside its core field of activity. It is just as important, however, to provide our customers with integral solutions and concepts that are stronger than ever before and that go far beyond the supply of feedstuff. This is where AGRAVIS is already active, for example, using the nutrients software Delos, which helps farmers implement the fertiliser ordinance.
Commitment to Danish partner, the DAVA Group
To finish off his first Annual General Meeting speech as Chairman of the Board of Directors, Dr Köckler made a firm commitment to cooperation with the Danish partner, the DAVA Group: “Cooperation in different joint ventures is going exceptionally well.” Ceravis AG, however, remains a problem. A turnaround is urgently required.
AGRAVIS continues on its course for growth
Chief Financial Officer Johannes Schulte-Althoff presented the figures for the financial year 2018 at the start of the Annual General Meeting. Despite months of drought and an increasingly more competitive market, AGRAVIS managed to end the last financial year with a pleasing jump in sales to 6.6 billion euros and earnings before tax of 30.4 million euros. “All things considered, we are pleased under the special circumstances. We’ve defied the weather conditions. AGRAVIS continues on its course for growth despite the drought,” affirmed Schulte-Althoff.
Pragmatic solutions for customers
The key business figures substantiate the AGRAVIS Group’s performance according to his statements. Turnover managed to increase by 2.2 per cent while earnings before tax gained 20.2 per cent in comparison with the previous year. At 81 million euros, the operating EBIT also increased again by some 9.4 per cent compared to 2017. “However,” affirmed Schulte-Althoff, “We based our plans on other figures in autumn 2017. Our target was more ambitious. Lost revenues caused by the drought period hit agricultural trade and the supplies business particularly hard. While our broad portfolio helped us endure this situation, the animals, machinery, markets and energy business units only managed to recover their loss of earnings to a certain extent.” Taking the entire crop year, from harvest 2018 to harvest 2019, Schulte-Althoff placed the drought-related gap in earnings before tax at 40 million euros. AGRAVIS employees developed pragmatic solutions for customers and did a good job under these circumstances. “That’s why we were able to gain market shares and expand further. We made steady progress.” This is also evident from the growth in equity capital, which increased to 581 million euros by the end of the financial year 2018.
In the first four months of 2019, AGRAVIS generated a turnover of 2.1 billion euros, thus achieving the same value for the same period in the previous year. However, earnings before tax are currently significantly lower than the previous year. “Nevertheless, we’re sticking to our plans for 2019,” stressed Chairman of the Board Dr Dirk Köckler during the Annual General Meeting in Wunstorf-Kolenfeld, Lower Saxony. “We want to end the year with a good turnover compared to the previous year of 6.5 billion euros and we’re also anticipating a stable operating profit compared to the previous year at 30.1 million euros.”
Expensive dry period for the AGRAVIS Group
The AGRAVIS executive was also aware that the consequences of the 2018 drought would continue to have a significant effect on business performance in the first six months of 2019. Overall, the previous year’s dry period has cost the AGRAVIS Group about 40 million euros on its earnings before tax. Of this amount, 24 million euros corresponded to the financial year 2018 and 16 million euros to 2019. “We’ve already looked at this total figure to some extent, but, all things considered, the start of the year was difficult,” explained Dr Dirk Köckler. This was also evident in the figures. After another dry April, rain arrived at the end of the month, just at the right time, boosting the hope for a “normal” financial year.
Ambitious goals and high investments
The CEO did not deny that the turnover and earnings targets were very ambitious from a current perspective and when looking at the present figures. “However, we expect to achieve the target figures, provided we have a normal harvest and don’t succumb to African swine fever or another abnormal year.”
Investments should remain high at 51.3 million euros in 2019 and stand at depreciation level. AGRAVIS wishes to extend its equity capital to 600 million euros with a stable equity ratio of 30 per cent. Dr Köckler explained further: “These are also key business figures which we wish to measure ourselves against.”
AGRAVIS Raiffeisen AG is increasing its equity capital over a longer period of time while spreading its financial structure more widely with this increase. The agricultural trading and service company’s Annual General Meeting in Wunstorf-Kolenfeld, Lower Saxony, voted by a large majority to amend the articles of association to allow an increase in the share capital by 12 million euros over the next two years. The Board of Directors was also authorised to issue profit participation rights for a total nominal amount of up to 100 million euros within the next five years.
“Both measures ensure additional equity capital and put us in a position where we’re able to finance further growth steps for AGRAVIS and provide a flexible response to any market opportunities arising,” explained Chief Financial Officer Johannes Schulte-Althoff.
The increase in capital from issuing new registered shares may lead to closer cooperation with potential new market partners who are often interested in reciprocal shareholdings as a permanent cooperation platform. Such transactions require shares to be available at short notice, as Schulte-Althoff explained. In the same breath, he pointed out that employees should have the opportunity to apply for shares. This would enhance identification with the company, create incentives and promote long-term loyalty to AGRAVIS.
The issuing of profit participation rights is another way of generating equity capital. “This is what we wish to use to bolster future growth of the company,” explains Schulte-Althoff. As a result, existing shareholders, interested farmers and banks should be given another opportunity to acquire a direct stake in AGRAVIS or invest money. AGRAVIS has already had excellent experience with this financial instrument on multiple occasions and enjoyed a strong demand from potential investors in the past. “Investor interest has surpassed our expectations,” states Johannes Schulte-Althoff as he looks back. The Chief Financial Officer values it as an indication that AGRAVIS is perceived as an attractive, reliable company focused not only on the agricultural market, but also in terms of investors for the long term.
The participation certificates need to be valid for up to 10 years. Details such as the date, issuing price and interest rate are currently being established and will probably be presented in the autumn.
The some 6,200 AGRAVIS shareholders will receive a dividend of 1.02 euros per share this year, as decided at the Annual General Meeting in Wunstorf-Kolenfeld, Lower Saxony. Based on the share book value of 25.60 euros, this corresponds to a dividend yield of 4 per cent. “The investment continues to be very attractive compared with the low interest rates from other types of investment on the capital market,” stressed CFO Johannes Schulte-Althoff to the around 850 shareholders and guests when referring to the strong AGRAVIS share payout ratio. The total pay-out thus totals 8.2 million euros, corresponding to 44 per cent of the group consolidated profit for the year.
In the financial year 2018, AGRAVIS Raiffeisen AG’s subscribed capital increased to 205.5 million euros (previous year: 200.2 million euros). The capital is divided into 8.03 million registered shares. The increase in capital is thanks to the founding of Raiffeisen West AG. 32 Westphalian cooperatives and cooperative companies pool their interests as shareholders so that now three strong national cooperative shareholder groups exist in Raiffeisen West AG, VR Holding and RHN Raiffeisen Norddeutschland. This also means the cooperative association is strengthened further for AGRAVIS shareholders. According to the articles of association, at least 60 per cent of AGRAVIS shares must be held by cooperatives or cooperative companies. They currently hold 61.7 per cent. 28.4 per cent of shares are owned by individuals and legal entities with a link to the sector. Farms hold a 4.5 per cent stake in AGRAVIS while employees hold 5.4 per cent.
The AGRAVIS share’s trading value has now risen again as a result of favourable company development – by 0.50 euros to 61.50 euros per share. Since AGRAVIS Raiffeisen AG was founded in October 2004, the original share price has thus risen by 35.90 euros. This represents an increase by 140 per cent.