Financial year 2016
AGRAVIS: Strategy for sustainable growth
AGRAVIS Raiffeisen AG lost consolidated turnover in 2016 – mainly price driven and as a result of the sale of three companies to Ceravis AG, but has by no means lost in terms of consistency, efficiency and effectiveness. "As exhausting as the challenges were, in fiscal year 2016, AGRAVIS once again proved that it is in a position to set corporate and strategic priorities in tough times – by making substantial investments in regional locations, through successful cooperation, solid acquisitions, and wise alliances and targeted expansion in internationalisation. We know where we stand", is how the new AGRAVIS Raiffeisen AG CEO, Andreas Rickmers, judged the 2016 fiscal year, which Johannes Schulte-Althoff discussed at the company's financial press conference.
In total, the AGRAVIS Group has succeeded in realising around €6.2 billion in 2016 – around 11 percent less than in 2015. Earnings before taxes amounted to €41.6 million, which is also around 8 percent lower than in the previous year. On the other hand, equity capital rose significantly by €567 million (plus 10 percent) and the equity ratio rose to 31.3 percent.
"The decline in turnover was due to the price development for important agricultural products, the weak milk price and price decreases for crude oil and important agricultural resources, such as fertilizer and crop protection. In addition, as of 1 January 2016, we sold three companies in the AGRAVIS Group in Schleswig-Holstein and Mecklenburg-Vorpommern to Ceravis AG – sales volume: around €300 million. The low level of turnover also has a negative impact on earnings before taxes, which is at the lower end of our expectations. In reviewing the financial year overall and in light of the circumstances described earlier, we are satisfied with what has been achieved. But not any more than that. We had hoped for more, but the market has not allowed for any more", Schulte-Althoff, Chief Financial Officer, clearly states. Despite the decline in turnover, however, the company wants to maintain its solid dividend policy and will propose a dividend of 5 percent at the Annual General Meeting on 11 May in Alpen/North Rhine-Westphalia. "Doing this also emphasizes our reliability and soundness in difficult markets."
As CEO, Andreas Rickmers has had a firm hand on the AGRAVIS tiller since the start of 2017 – he is focusing on sustainable, profitable growth. Acquisitions, cooperation and strategic goals also contribute to this. AGRAVIS Raiffeisen AG therefore wants to strengthen its market position – in its core divisions. Just a few weeks ago, AGRAVIS announced the acquisition of 16 Raiffeisen Markets from RWZ Rhein-Main eG as well as the wholesale business covering approximately 50 Raiffeisen Markets in the RWZ's areas of operation. "We can now implement this deal. The Cartel Office gave us the green light last week", says Rickmers, who immediately looks further ahead to the future: "And that should not be the last cooperation or acquisition this year. We still see various opportunities to grow through targeted steps in our core business areas."
"AGRAVIS is well positioned – we are on stable footing", stresses Rickmers, who has been CEO for only about 100 days. "I found my bearings quickly as CEO at AGRAVIS. I am impressed by the AGRAVIS family – from executive management to middle management down to the trainees. Qualified, motivated employees, a lot of expertise, entrepreneurial thinking and behaviour are lived out here. We have made a lot of progress in many areas, but of course there is still room for improvement. The market and the demands on the AGRAVIS Group continue to demand a high degree of changeability."
The new AGRAVIS CEO has clear ideas, which he clarifies: "AGRAVIS will continue to pursue a strategy of profitable and sustainable growth. There will be no change in our basic corporate strategy. In implementing this strategy however, we will define four clear points we are going to focus on, and we will combine proven results along with innovative ideas."
AGRAVIS will focus even more strongly on customer orientation – and will grow in the cooperative network. And: "We will make sustainability an integral part of our business model as well as systematically exploit the potential offered by digitalisation by leveraging our innovative capabilities and innovative strength", says Rickmers. Targeted internationalisation of the business is also on the agenda – without, however, neglecting regional strength and regional market expansion, he further states.
He is following up on these words with facts: "Growth outside AGRAVIS core regions in Westphalia, Lower Saxony, Saxony-Anhalt and Brandenburg is becoming increasingly visible. Yes, we also want to be a cooperative alternative in the South of Germany and bring our strengths to the marketplace." These include the most recent acquisitions – and the AGRAVIS activities with the DoFu plant in Straubing, the AGRAVIS agricultural centre in Bamberg and the acquisition of the Claas distribution rights in the Rheinhessen/Pfalz region.
In addition, the AGRAVIS CEO wants to strengthen collaboration in the cooperative network – both in the south and in the north, the company wants to become an evermore frequent contact point for cooperative wholesale trade. "This association is a unique selling point with a high degree of sustainability. We intend to expand the two-tier cooperative business model." To do this, Hans-Georg Bruns, who is still deputy board member of AGRAVIS until September, will subsequently set up his own consulting company and, among other things, continue to develop collaboration in the cooperative network for the AGRAVIS Group.
At the same time, AGRAVIS is looking for a board member, a COO, to strengthen the operative business and establish new approaches. "This is not only in line with our sustainable growth strategy", says Rickmers, "but is also because we want to expand beyond our core business in the south of Germany as well as internationally."
With the growth areas of "sustainability and digitisation", AGRAVIS relies on "two other priorities, which are certainly not to be expected from an agricultural trade company. But we see ourselves as an innovative company. We know that we have to offer our customers solutions for the challenges of tomorrow."
As far as fiscal year 2017 is concerned, Rickmers is still cautious. "According to our current assessment, we will continue to see highly competitive markets, rather weaker prices for grains and cereals, and the volatility will still be there as well. For this reason, we expect AGRAVIS to move sideways in turnover and earnings before taxes in 2017. This should change positively in 2018."