Kernel Holding and Trigon Agri revealed that a wet autumn in the former Soviet Union and lower grain prices had marred the benefit of a strong start to the harvest, and helped drive both groups into the red.

Farm operator Trigon Agri said that autumn harvesting conditions had been "unusually challenging" this year, as rains at its divisions in both Russia and Ukraine, which started in August, "did not let up until the beginning of November".

Whilst this rain "potentially bodes well" for next year harvest, getting winter crops off to a good start, "it negatively affected the quality and yields of our 2013 late harvest", Trigon Agri chairman, Joakim Helenius said.

And, with grain prices lower too, even though the group managed a record yield overall, it swung to a loss of E16.8m for the July to September period, wider by 14.3% than a year before.

'Result will be weaker'

Revenues rose a modest 8.5% to E26.8m, despite the group raising crop sales by 54% to 136,000 tonnes, with lower prices offsetting higher volumes.

The average barley sales price fell particularly significantly, down 35% to E102 a tonne.

Mr Helenius cautioned that thanks to the "continued weakness" in grain prices, "our result for 2013 will be weaker than in 2012".

Analysts have in fact banked on a halving in full-year after-tax losses and a rise in earnings before interest, taxation, depreciation and amortisation (ebitda) to E49.2m for 2013, up 90% year on year.

Nonetheless, Trigon Agri shares, which are listed in Stockholm, showed a relatively small reaction, falling 0.8% to SEK2.59.

'Weather-related delays'

Separately, Kernel Holding, the Ukraine-based sunflower oil to silos group, revealed a tumble to an after tax loss of E34.7m for the quarter, from a profit of E37.6m a year before, reflecting also the impact of wet weather.

Ebitda at the group's export terminals division halved to $3.7m, as rains slowed the Ukraine harvest, adding to a squeeze on supplies also caused by farmers' reluctance to sell at prices lower than they have been used to in recent seasons.

"The overall speed of grain exports from Ukraine was low in the quarter due to not only farmer's reluctance in selling at lower grain prices but also to weather-related delays of the harvesting campaign," Kernel said.

"The pace of exports from Ukraine is comparably slower [than from Russia] due to delays in harvesting campaign caused by heavy rains in early autumn."

Falling prices

The lower prices had hurt the group's own farming operations, one of the most substantial in the Black Sea, harvesting 391,000 hectares of crops, mainly corn, at 42% of the area, but with sunflowers, soybeans and wheat grown too.

Farming revenues fell 19.5% to $69.9m, with the division falling to an ebitda loss of $6.4m, from a profit of $25.9m a year before, when Kernel was amid a harvest of 247,000 hectares.

"With global prices for soft commodities declining sharply this summer, prices at the farm gate declined by approximately 40-45% for corn, 30-35% for sunflower seed, 15-20% for soybean, and 20-25% for wheat, erasing profits from improved productivity," Kernel said.

Nonetheless, with the group forecasting that Ukraine's late harvest would shift some business for its export and silo operations from the July-to-September period into the current quarter, Kernel shares, which are listed in Warsaw, rose 2.2% to 42.44 zloty.


 

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