SOURCE: Agria Corporation

Agria Corporation

February 27, 2015 07:23 ET

Agria Reports Financial Results for First Half of Fiscal Year 2015

Operating Profit up 46%; Net Profit Attributable to Shareholders up Over 100%

BEIJING, CHINA--(Marketwired - Feb 27, 2015) - Agria Corporation (NYSE: GRO) (the "Company" or "Agria"), a global agricultural company, today announced its financial results for the six months ended December 31, 2014. Financial performance featured substantially higher operating and net profit, as the Company improved gross margins while holding operating expenses relatively flat.

Note: All figures refer to the first half of fiscal year 2015 unless otherwise noted. All comparisons are to the first half of fiscal 2014 unless otherwise noted.

Financial Highlights:

  • Revenue was $538.9 million, an increase of 1.9%. Revenue increased 19% in Rural Services, 4% in Crop Protection, Nutrients and Merchandise, and declined 11% in Seed and Grain.

  • Operating profit was $22.2 million, an increase of 46%. Operating profit increased 75% in Rural Services, 36% in Seed and Grain, and declined 1% in Crop Protection, Nutrients and Merchandise. Operating profit growth was driven by gross margin expansion of 117 basis points to 24.5%, combined with restrained operating expense growth of 1.7%.

  • Net profit was $12.6 million, an increase of 61%. Net profit growth reflects the higher operating profit and lower financing costs, offset by higher income taxes. Net profit attributable to shareholders increased 118% to $3.2 million, or $0.03 per share.

Mr. Alan Lai, Agria's Executive Chairman, commented, "Results for the first half of the fiscal year were quite satisfactory, demonstrating the wisdom of our focus on restoring strong profitability across all of our operations. Each of our business segments was solidly profitable, with two of the three reporting exciting profit growth. We are favoring profit over sales growth in how we manage our businesses. For instance, Seed and Grain saw an 11% sales decline, yet a 36% increase in operating profit. Greater profit and the associated cash flow will enable us to fund upcoming growth initiatives, as we continue to pursue our objective of becoming a recognized leader in the global agriculture industry."

Business Highlights

The following table summarizes the results of business segments for the first half.
(In conformity with IFRS as issued by the IASB)

  Revenue       Operating Profit    
  Six months ended
Dec. 31,
  Var.    Six months ended
Dec. 31,
  Var. 
  2014   2013         2014   2013      
  US$'000   US$'000         US$'000   US$'000      
Crop Protection, Nutrients & Merchandise 255,398   246,428   4 %   19,637   19,828   -1 %
Seed & Grain 157,451   176,493   -11 %   10,229   7,506   36 %
Rural Services 126,091   105,788   19 %   6,632   3,783   75 %
Corporate -   -         -14,267   -15,893      
Total 538,940   528,709   2 %   22,231   15,224   46 %

Seed and Grain
Operating profit of $10.2 million was 28% of the group total before corporate overhead, and was up 36%. Revenue was $157.5 million, which constituted 29% of our group revenue, and was down 11%. The Company's focus on more profitable sales in this segment resulted in profit growth despite a decline in sales. Seed sales were strong in New Zealand and China, contributing the majority of profit. Australian seed sales declined as early strength was dampened by drought conditions late in the selling season. South America experienced extremely wet conditions, which reduced demand as well.

Crop Protection, Nutrients, and Merchandise
Operating profit of $19.6 million was 54% of the group total before corporate overhead, and was basically unchanged from last year, down less than $0.2 million. Revenue was $255.4 million, which constituted 47% of group revenue, and was up 4%. Revenue growth was driven by better same store sales, as the unit footprint was basically unchanged. The Company completed an extensive training and technology upgrade program for its field staff, which has resulted in more consultative selling of higher margin products, especially in the agronomy category.

Rural Services
Operating profit of $6.6 million was 18% of the group total before corporate overhead, and was up 75%. Revenue was $126.1 million, which constituted 23% of group revenue, and was up 19%. Growth was driven by greater profitability in livestock and irrigation, which together delivered 90% of operating profit. Strict cost control also reduced regional administrative costs by over $1.5 million. Irrigation operating profit grew 25% on 51% sales growth and contributed over half of segment profit. Livestock operating profit grew 317%, on solid revenue growth of 38%. Cattle and sheep volume was flat, but pricing was improved. Wool operating profit grew 24% on better pricing, as revenue was down on 5% fewer sales processed.

Mr. Lai concluded, "Our outlook for the remainder of the fiscal year is cautiously optimistic, and we now expect greater profitability than we did at our last trading update in late December. The agriculture industry will always be challenging, since we have no control over key influences like the weather, exchange rates, or market prices. Nonetheless, we are building a business with sufficient product and geographic diversification that we can thrive through all conditions. Improving upon this resiliency will be a key objective as we expand in the years ahead."

Conference Call
Agria will discuss its financial results and outlook in a conference call on February 27, 2015 at 8:00 a.m. Eastern Time/9:00 p.m. Beijing time. The call will be hosted by Mr. John Fulton, Chief Financial Officer, and Mr. Kean Seng U, Head of Corporate and Legal Affairs. Investors interested in participating in the live call should dial +1 (719) 325-2308 and enter passcode 3391997. A simultaneous live webcast will be available on the Company's website at www.agriacorp.com. A replay of the call will be available either via telephone or webcast until March 6, 2015. The telephone replay can be accessed by dialing +1 (858) 384-5517 and entering passcode 3391997. The webcast replay can be accessed in the Investor Center on the Company's website.

About Agria Corporation
Agria (NYSE: GRO) is a global agricultural company with three principal business segments: Seed and Grain; Crop Protection, Nutrients and Merchandise; and Rural Services. The Seed and Grain segment is engaged in research and development, production and sale of a broad range of seed products and trading of seed and grain products globally. The Crop Protection, Nutrients and Merchandise segment operates an extensive chain of retail stores that supply farm input materials. The Rural Services segment provides livestock trading, wool trading, irrigation and pumping, real estate agency and other agriservices. For more information about Agria Corporation, please visit www.agriacorp.com.

Safe Harbor Statement:
This announcement contains forward-looking statements. These statements, including the management's commentary, are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Agria may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Agria's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, those risks outlined in Agria's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this announcement unless otherwise stated and Agria does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

   
   
CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
(UNAUDITED)
 
(In conformity with IFRS as issued by the IASB)  
   
  For 6 months ended December 31,  
  2014     2013  
  US$'000     US$'000  
           
Revenue 538,940     528,709  
Cost of sales (407,104 )   (405,582 )
Gross profit 131,836     123,127  
Other income 272     158  
Other operating expenses (109,877 )   (108,061 )
Operating profit 22,231     15,224  
Equity accounted earnings of associates 129     1,028  
Non-operating expenses 903     303  
Fair value adjustments 228     1,444  
Profit before interest and income tax 23,491     17,999  
Net interest and finance costs (3,968 )   (8,484 )
Profit before income tax 19,523     9,515  
Income tax (6,934 )   (1,713 )
Profit for the period 12,589     7,802  
           
Attributable to:          
Equity holders of the Company 3,211     1,472  
Non-controlling interests 9,378     6,330  
  12,589     7,802  
Earnings per ordinary share (US$)          
Basic 0.03     0.01  
Diluted 0.03     0.01  
           
No. of ordinary shares outstanding 110,766,600     110,766,600  
   
   
   
         
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(In conformity with IFRS as issued by the IASB)    
    As at December 31   As at June 30
    2014   2014
    US$'000   US$'000
         
ASSETS        
Current assets:        
  Cash and cash equivalents   28,043   13,958
  Accounts receivable, prepayments and other current assets   301,602   235,213
  Inventories and biological assets   170,480   217,607
Total current assets   500,125   466,778
         
Non-current assets:        
  Property, plant and equipment, net   92,855   104,603
  Intangible assets   6,834   7,348
  Goodwill   3,293   3,278
  Other non-current assets   8,313   11,375
  Deferred tax asset   9,838   9,658
Total non-current assets   121,133   136,262
Total assets   621,258   603,040
         
LIABILITIES AND EQUITY        
Current liabilities:        
  Short-term bank borrowings and current portion of long-term bank borrowings   61,895   38,864
  Accounts payable, accrued expenses and other liabilities   244,022   226,854
Total current liabilities   305,917   265,718
         
Non-current liabilities:        
  Long-term bank borrowing, net of current portion   86,094   79,142
  Other long-term liabilities   42,211   42,367
Total non-current liabilities   128,305   121,509
Total liabilities   434,222   387,227
         
Equity:        
         
  Equity of the Company   66,070   75,286
  Non-controlling interests   120,966   140,527
Total equity   187,036   215,813
Total liabilities and equity   621,258   603,040
         
         

Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is completed on our year-end financial statements, which could result in significant differences from this unaudited financial information.