Rusagro (MCX: AGRO) — the largest diversified agro-industrial holding in Russia. The company operates the fourth largest farmland.
26 April Rusagro published operating results for the first quarter of 2021. Thanks to high prices for final products, the business was able to demonstrate record revenues in all key segments.
Position in the industry
Starting from the second half of 2020, prices for agricultural products in Russia began to rise against the background of strong demand from large countries. At the end of the past year, the Russian agro-industrial complex sold record volumes of products and exports exceeded imports for the first time in recent years..
Commodity prices have risen, for which agricultural products are used: meat, sugar, sunflower oil, dairy products and others.
The state is concerned about the rise in prices. To protect the domestic market, slow down price increases and stop food inflation, authorities have introduced tangible export duties on some crops. Furthermore, The Ministry of Agriculture agreed on minimum and maximum grain prices for the period from 1 July 2021 to 30 June 2022. When price limits are reached, the state will buy or sell large volumes of grain, to adjust prices.
Rusagro is one of the leaders in terms of sugar production, pork and oil and fat products, therefore benefits from rising prices. Furthermore, vertical integration allows the company to gain an advantage over competitors, who purchase raw materials from external sellers.
Revenue
For the first quarter of 2021, the company's revenue reached a record 50.85 billion rubles against 33.61 billion rubles for the same period last year. The main reason for the rise in prices for cereals, sugar, meat, vegetable fats, oils and dairy products. All major business segments have updated historical highs in revenue for the first quarter.
About 54% revenue came from the fats and oils segment, including dairy products, on 17% fell on the sugar and pork segments, and further 12% made up the agricultural segment.
Revenue "Rusagro" for the first quarter, billion rubles
| 2017 | 18,78 |
| 2018 | 15,5 |
| 2019 | 28,87 |
| 2020 | 33,61 |
| 2021 | 50,85 |
2017
18,78
2018
15,5
2019
28,87
2020
33,61
2021
50,85
Operating performance by segments
Fat and oil segment, including dairy products. The company's revenue increased by 62% up to 27.69 billion rubles qoq.
At the same time, sales decreased by 7% up to 386 thousand tons. Revenue growth is associated with a sharp increase in prices — for 68% for industrial fats and 102% for vegetable oils year by year.
Sales volume in thousand tons and revenue of oil and fat and dairy products in billion rubles for the first quarter
| Volume of sales | Revenue | |
|---|---|---|
| 2017 | 122 | 4,37 |
| 2018 | 128 | 4,45 |
| 2019 | 372 | 14,28 |
| 2020 | 416 | 17,14 |
| 2021 | 386 | 27,69 |
Volume of sales
2017
122
2018
128
2019
372
2020
416
2021
386
Revenue
2017
4,37
2018
4,45
2019
14,28
2020
17,14
2021
27,69
Sugar segment. Sugar segment revenue increased by 65% quarter-on-quarter to RUB 8.64 billion. Sugar prices rose by 58% to 39,3 R per kilogram excluding VAT. Against the backdrop of a favorable market situation, the holding increased sales volumes by 19% up to 202 thousand tons.
I will note, that the volume of sugar production in January-March of this year collapsed by 83% up to 9 thousand tons against the backdrop of a low beet harvest in the past agricultural season 2020-2021. The company during this period sold in 22 times more sugar, what produced.
Sales volume in thousand tons and revenue of the sugar segment in billion rubles for the first quarter
| Volume of sales | Revenue | |
|---|---|---|
| 2017 | 196 | 7,41 |
| 2018 | 166 | 5,21 |
| 2019 | 104 | 4,53 |
| 2020 | 169 | 5,24 |
| 2021 | 202 | 8,64 |
Volume of sales
2017
196
2018
166
2019
104
2020
169
2021
202
Revenue
2017
7,41
2018
5,21
2019
4,53
2020
5,24
2021
8,64
Meat segment. Revenue from sales of meat products reached 8.56 billion rubles and was 26% more, than in the first quarter of 2020. At the same time, sales of pig products increased only by 2% up to 58 thousand tons, but the prices went up 22% to 144,7 P per kilogram, which led to record-breaking profits..
Pig production in live weight increased by 4% up to 75 thousand tons against the background of the full capacity of three new pig breeding complexes in the Tambov region.
Sales volume in thousand tons and revenue of the meat segment in billion rubles for the first quarter
| Volume of sales | Revenue | |
|---|---|---|
| 2017 | 42 | 4,73 |
| 2018 | 39 | 4,33 |
| 2019 | 40 | 5,19 |
| 2020 | 57 | 6,81 |
| 2021 | 58 | 8,56 |
Volume of sales
2017
42
2018
39
2019
40
2020
57
2021
58
Revenue
2017
4,73
2018
4,33
2019
5,19
2020
6,81
2021
8,56
Agricultural segment. Revenue from sales of agricultural crops increased by 35% compared to the first quarter of last year against the backdrop of rising wheat prices, sunflower and soy. At the same time, sales of oilseeds and grains decreased by 2% to 275 thousand tons due to a drop in sunflower sales by 54% and soybeans 41%.
Sales volume in thousand tons and revenue of agricultural products in billion rubles for the first quarter
| Volume of sales | Revenue | |
|---|---|---|
| 2017 | 721 | 3,67 |
| 2018 | 137 | 1,47 |
| 2019 | 353 | 4,92 |
| 2020 | 281 | 4,42 |
| 2021 | 275 | 5,96 |
Volume of sales
2017
721
2018
137
2019
353
2020
281
2021
275
Revenue
2017
3,67
2018
1,47
2019
4,92
2020
4,42
2021
5,96
What's the bottom line?
Rising prices for Rusagro products against the backdrop of food inflation in Russia allowed the company to renew all-time highs in terms of sales revenue in all major business segments. At the same time, sales volumes do not show the same dynamics., and in the oil and fat segment, accounting for more than half of all revenue, sales volumes are declining. Rising prices are not supported by equally strong domestic consumer demand for products.
The state is trying to regulate prices in the market, However, it is still difficult to speak about the effectiveness of these measures.. Polls, Russians estimate the observed level of inflation for the year in 14,5%, that is in 2,6 times higher than the official level. Similar processes are visible in the global market.
